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REVIEW SUMMARY
Property. Postcard Inn, St. Pete Beach
Sector. Hotels
Key. Going retro after a change of plans
The Postcard Inn on St. Pete Beach was supposed to look a lot different now. What used to be a Travelodge dating back to 1957 was to be razed and replaced with a gleaming hotel-condo tower dubbed Avalon, until citizen protests and an oncoming recession scuttled the project.
Last year, the property for which Starwood Capital Group paid $37.1 million in 2005, near the height of the commercial real estate boom, became a recycling project instead. The original 196 rooms were redecorated, the weedy seven-acre courtyard leading to the beach received new landscaping and the lobby now has an eclectic look and feel, with music throughout the premises and a giant chalkboard behind the front desk posting weather and other information.
“A lot of people tell us it reminds them of Southern California,” says Patrick Brophy, the Postcard Inn's general manager. And that's just one of many ways the hotel, which opened about a year ago at 6300 Gulf Blvd., sets itself apart from all the others lining the Gulf Coast.
There may be other opportunities for investors to try their hand at beachside hotels that aren't connected with major hotel flags and can charge advantageous room rates aimed at attracting guests locally and nationwide. However, prospective buyers may be waiting for property values to move lower, or for current owners to default on mortgages, before making a move.
Debt restructuring needed
The key for current owners is to restructure their debt so that they will be in solid position for an anticipated rebound in the Gulf Coast hotel market over the next three to five years, according to Jeramie Concklin, CEO of Clearwater-based Guardian Solutions. The company has seen a significant increase in the number of hotel owners facing imminent foreclosure who are able to save their properties.
Guardian reports that the number of hotels being sold nationally this year as a percentage of investment volume within commercial real estate property sectors has grown from less than 8% at the peak of the market to at least 10%. But more than a third of hotel transactions closing through the first half of 2010 involved distressed conditions, such as foreclosures, auctions or short sales.
“You can take a non-performing property and turn it into a performing property in a short amount of time,” Concklin says. He points out that Starwood Capital “had to make lemonade” with the property that is now Postcard Inn after its original redevelopment plans fell apart.
“You have to be able to think outside the box,” he says. Which is precisely what Postcard Inn has been doing since reopening a year ago.
Working with management firm B.R. Guest, Starwood Capital invested $7 million into transforming the hotel into roadside-type accommodations offering beach access without exorbitant rates. Rooms are available for as little as $49 weeknights, with various special rates and packages offered.
Vintage surfboards are affixed inside each of the rooms, with old kitchenettes replaced by lounge areas. Famous quotes are stenciled on some of the walls inside the rooms, while others have beach-related artwork.
Real action is outside
Yet the hotel operators try to do as much as possible to get guests out of their rooms. Various events are held in the courtyard on weekends, a beachside bar and snack shack are available, and the hotel includes a Wildwood BBQ & Burger restaurant on the premises.
“We're not just selling a room, we're selling an experience,” says Brophy, who left a position as hotel manager of the Don CeSar Beach Resort last July to become Postcard Inn GM. He says he has been able to apply much of what he learned about higher-level event planning into a budget hotel setting.
The hotel booked 27 weddings over the last three months and has also hosted corporate events involving hundreds of guests, he says. It enjoys more than 90% occupancy on weekends but is making more of a concentrated effort to attract guests Sunday through Thursday nights, he says.
While things appear to be in good shape now, the Postcard Inn got off to a bit of a rocky start.
It opened just in time for one of the coldest winters on record for the Gulf Coast and was starting to experience a rebound in March and April when the BP Deepwater Horizon disaster occurred off the Louisiana coast, dumping millions of barrels of oil into the Gulf of Mexico and even more misperceptions about the effect on the Florida Gulf Coast.
'Starting to see momentum'
Although the oil was hundreds of miles away from the Gulf Coast, the perception among millions of tourists was that all of Florida's beaches were soiled mainly because of media reports from the state's Panhandle of tar balls washing ashore.
Brophy says his hotel and others worked with local tourism bureaus to promote clean beaches in major media markets, even posting a “White Sand Guarantee” on the Postcard Inn website.
“Being a new hotel, it's difficult to measure how much business we lost,” he says. “We're slowly starting to see momentum.”
Brophy adds that he tries to keep the hotel's 130 employees, some of whom worked for the old Travelodge, as close to full-time status as possible, which is why it's important to build its occupancy throughout the week, not just weekends.
Rather than advertising, the Postcard Inn is relying on other media buzz to promote itself, according to Brophy. It has been featured in Travel + Leisure magazine, USA Today and The New York Times, and the hotel is becoming tied into local organizations and events, such as the Children's Dream Fund and the Outback Bowl.
Its owner is also looking for a possible location for a second Postcard Inn, with the potential of establishing a chain of retro-chic hotels. “We'd like to turn this into a brand,” he says.
The biggest thing Postcard Inn wants to do is set itself apart from all the other hotels on St. Pete Beach. “We're not trying to be like everyone else,” he says. “We want to be a departure from the norm.”
Postcard Inn on the Beach has enjoyed a lot of press buzz, both locally and internationally, in its first year of operation. Yet the hotel may have trouble living up to one of its better plugs.
During an Oct. 14 segment on NBC's late-morning “Today” show, hosted by Kathie Lee Gifford and Hoda Kotb, Postcard Inn got a prominent mention as part of their “Girlfriend Getaways” feature. The hotel has been promoted on “Today” on other occasions throughout the past year, but this one was particularly funny.
Noting the hotel's surf theme, Gifford remarked what a beautiful place St. Pete Beach is for vacations, adding the following caveat: “There's good surfing there in the winter time.”
As we all know, the only decent time to surf the Gulf Coast is when a hurricane or tropical storm is kicking up waves, and that's only likely to happen between summer and Thanksgiving.
Oh well, any publicity is good publicity in the hotel business.
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