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Business Observer Thursday, Jul. 23, 2009 12 years ago

Rebuild a Star

Hurricane Charley sunk a Gulf Coast business star five years ago. Its replacement is finally ready, but challenges loom.
by: Mark Gordon Managing Editor

Hurricane Charley sunk a Gulf Coast business star five years ago. Its replacement is finally ready, but challenges loom.

The Holiday Inn in Punta Gorda defied all hospitality industry logic for years.

The hotel consistently ranked tops in the country for bookings and was sold out for months at a time through the 1990s and early part of this decade. Not even the post-9/11 travel industry malaise dented the hotel's performance, as it was one of the chain's only properties that didn't post an occupancy drop in late 2001 and early 2002.

This from a hotel in a sometimes forgotten town of about 15,000 people at the mouth of the Peace River, about halfway between Sarasota and Fort Myers.

“It was just one of those places off the beaten path that did good business no matter what the industry was doing,” says John Zaccari, who ran the hotel through his Sarasota-based management company.

That all ended Aug. 13, 2004, when Hurricane Charley decimated the hotel. Its roof was blown off. Windows from top to bottom were shattered. Debris, from bathtubs to bed frames, was scattered for blocks.

The hotel was a total loss as well as a business nightmare for Zaccari, who's A2Z Hospitality Management had overseen the property since 2001.

Five years later, Zaccari is going from a nightmare to a novel challenge: His company now manages a new hotel that was built a few hundred yards away from where the Holiday Inn once stood. The 106-room hotel, a Four Points by Sheraton, opened June 26.

The challenges run deep. The recession, of course, looms large, as guest stays are becoming shorter and less frequent in hotels up and down the Gulf Coast.

Second, somewhat paradoxically given the sour economy, competition has actually increased in the area, as four new properties have been built within a few miles of the Four Points, including a Wyvern Hotel down the street.

Finally, says Zaccari, opening a hotel in the summer off-season in Florida is something “you never want to do.”

Nonetheless, Zaccari, a native New Yorker who has been working in the hotel industry in Sarasota for 23 years, brings a cautious optimism to the project. “This will make us work that much harder,” he says.

'Bad guys'
Some of the hard work for the core of the hotel itself took place over the past five years, during the tortuous journey from destroyed and decimated Holiday Inn to shiny and new Four Points by Sheraton. That work mostly comes courtesy of Joe Suriol, the developer who built the hotel though his Miami-based firm, Interdevco.

Suriol came into the project with what he thought was the best of intentions. He initially set out to build a mixed-use complex of condos, retail stores, a marina, and of course, the hotel.

The idea was to do what many developers in Charlotte County wanted to do in the post-Charley aftermath: Build stuff even better than it was before the storm.

“They came in with a rather ambitious plan,” says Punta Gorda Growth Management Director Dennis Murphy, Sr. “It was a fairly substantial undertaking.”

That means the project's destiny was to be held up in a Byzantine maze of meetings, conferences and debates. Indeed, Suriol says he met with just about every group in town, from the local Lions Club chapter to chamber folks to condo associations. He and the project survived through two city councils.

The details of the disputes, according to Suriol, were standard Gulf Coast development fare. First, there were the concessions and trade-offs with city officials on height, environmental and other code restrictions. Then there were the zoning disputes regarding what could be built where.

Suriol adds he had one more thing going against him: He was a developer, which put him in some unpleasant company. “Developers are always the bad guys,” says Suriol, who lives in Sarasota, “and I was one of those bad guys.”

Murphy doesn't dispute that point. While city officials had nothing against Suriol, says Murphy, the city had just been burned by a developer who failed to follow through on promises for a project at a nearby park. As a result, the City Council was “very weary about developers.”

The struggle lasted more than three years, until construction permits were finally issued in 2007 and 2008. Of course, during that time, Suriol and his partners shouldered all the risk. That included more than $1 million in carrying costs and almost as much in architectural and other planning fees.

The hotel's completion, in the spring, brought out the pleasantries. Suriol says he holds no grudges against city officials and Murphy says city leaders are thrilled with the final project, down to the landscaping. “Joe performed admirably,” says Murphy. “He ended up producing what we were looking for, so everyone was happy.”

Suriol says he still hopes to build the marina and other components of the project, when the economy turns around. The condo phase is on indefinite hold.

Apples and sausage
With the hotel finally open, however, the burden of hard work now falls on Zaccari and his sales team.

Sales and Marketing Director Kelly Ann Dixon says one key point in group business sales calls, so far, is that the Four Points doesn't have the word 'resort' in its nameplate — a conscious play on the backlash companies have been getting for taking too lavish of a business trip.

But Dixon says the hotel still has some resort-style features. She bills the hotel as “relaxed and non-stuffy, but chic and homey.” Features include flat-screen TVs in all the guest rooms, slices of apple pie in the lobby and free bottled water.

Another driving force for sales, says Dixon, is that the hotel is the only Four Points by Sheraton hotel between Tampa and Miami. In fact, the hotel's parent company, Starwood Hotels & Resorts Worldwide, is using the Punta
Gorda property as a test-run in its $1 billion brand redevelopment of all of its Sheraton properties.

These features are slowly coming together to produce results, Dixon says. For example, the hotel already booked $60,000 of group business for October.

But recession-laden difficulties linger.

First off, there is the internal debate Zaccari and his staff is holding over room rates. Group rates at the Four Points Punta Gorda start at $89 a night, with individual rates about $10 more than that. Two years ago, rates like that would have put the hotel right in the middle of its competitors.

But in the downturn, many hoteliers are lowering prices just to raise the occupancy rates, a move that puts Zacarri's hotel in a higher price bracket in many instances. Price cuts — not just onetime sales — are happening in several other industries too, from retail to homebuilding to auto sales.

The problem with price cuts, some business consultants and experts say, is that it devalues the brand. Then, when the recession ends, it can be difficult, if not impossible, to raise prices back to where they once were.

Zaccari is also worried about altering the type of customer he wants to bring in to the hotel on a repeat basis, another possible symptom of slashing daily room rates. So he's holding steadfast on rates, for now.

Says Zaccari: “You have to balance the rates with changing the type of client you will get.”

The economic downturn is impacting the hotel in other ways, too. It has forced Zaccari to tinker with his details-matter business philosophy, something he takes great pride in. (See related story.)

So in order to save money wherever possible, Zaccari has cut back on a few subtle features. For example: Red and green apples are now just red. And the bacon and sausage at the hotel's daily breakfasts have been reduced to just bacon.

“It's the little things like that,” he says. “We hope the people don't notice.”

Executive Tip: Details Matter

John Zaccari, who has run Sarasota-based A2Z Hospitality Management for eight years, says his company lives and dies by constantly paying attention to small details.

It's a well-worn business tip, but one that can be a big boost to remember during a recession.

“These are the things that make a customer come in and go 'wow,'” says Zaccari. “And that will get them to come back again.”

For Zaccari, it starts with paying attention to repeat customers. For instance, his staff will ask those clients what toothpaste and soap they like. The employees then stock the room with those products before the guest's next arrival.

Zaccari's company manages three hotels on the Gulf Coast, including the Four Points by Sheraton in Punta Gorda, which opened in June; a Quality Inn in Tampa, near the Seminole Hard Rock Casino; and a Country Inn & Suites in Sarasota, off Clark Road and Interstate 75.

The company had about $2.8 million in 2008 revenues, a figure Zaccari expects to drop to about $2.5 million in 2009. It has 63 employees.

Zaccari says his hyper-attention to details truly paid off in the summer of 2004, when Hurricane Charley wrecked the Holiday Inn in Punta Gorda, which A2Z managed. Back then, Zaccari made a point to personally write down the name and location of the shelters where each guest was sent during evacuation.

Due to a glitch amid the pre-storm chaos, however, about a dozen dogs and cats were left behind at the hotel. Turns out Zaccari had a detailed log with the owners of those animals, too.

Information like that allowed Zaccari to add one more title to his resume: Pet-delivery man. Zaccari personally reunited each pet with its family, driving around Charlotte County from shelter to shelter as the storm approached Punta Gorda.

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