Loading
Executive Summary
Industry. Hospitality Trend. Luxury hotels are benefiting from higher room rates. Key. Hoteliers must reinvest to stay current.
One hotel has the power to put a city on the map. Ask anyone in Naples, where the city's two Ritz hotels have turned the former sleepy town on the edge of the Everglades into a top-tier destination for wealthy tourists and corporations.
Now a $300 million renovation of the Marco Island Marriott Beach Resort from insurance giant and owner MassMutual could breathe new life into the island and put it on par with Naples. When renovations are completed in January 2017, the Marco Island Marriott will be rebranded as a JW Marriott resort, a luxury brand with 80 hotels worldwide. It will be the first JW Marriott on the Gulf Coast.
The scale of the renovation and expansion is breathtaking: The hotel is building 110,000 square feet of event space, nearly the size of two football fields; it's renovating all 726 existing rooms; and it's adding a new 94-room adults-only tower with a rooftop pool, restaurant and bar. It's also building a 12,000-square-foot entertainment center, renovating nine restaurants and adding two more. It recently completed $10 million worth of pool renovations and added a new $7 million kitchen to accommodate the growth.
Rick Medwedeff, the general manager who is spearheading the project, is already seeing success. “For 2017, we're at 40,000 rooms booked,” he smiles. Another reason to smile: Medwedeff says he'll be able to boost rates 30% without sacrificing already high occupancy.
“The final outcome and rebranding truly does support the fact that we are collectively a luxury destination,” says Jack Wert, executive director of the Naples, Marco Island, Everglades Convention and Visitors Bureau.
Indeed, two Ritzes and a JW Marriott elevate the area's ability to compete with luxury destinations as far as Hawaii. “Competition in the marketplace is really intense,” says Wert.
Corporate business
Five years ago, in the middle of the recession, few hospitality industry executives were thinking about corporate business. It had virtually disappeared when companies slashed expenses.
But Medwedeff wasn't one of them. He foresaw the resort's inefficient meeting space would be its Achilles' heel when the economy recovered. The ceilings were too low, the rooms couldn't be partitioned and the space outside the venue where people like to network was too cramped.
The Marriott's aging convention space fell off the corporate-meetings radar, especially when compared with other modern beach resorts. “We found ourselves struggling to attract new clients,” Medwedeff says. “We would be at risk long-term.”
But Medwedeff, who oversees 750 employees, is a skilled politician. Over a period of five years, he persuaded residents, city officials and the hotel's owners to move on one of the biggest construction projects in the region.
Medwedeff presented his plans to area residents early on, and agreed to make changes more to their liking. For example, he eliminated a parking deck and lowered the height of the new tower in response to their suggestions. “People are scared of change,” Medwedeff acknowledges.
Public meetings also helped Medwedeff get the political backing he needed for city approvals for the undertaking. “They saw we were being good corporate citizens,” Medwedeff says.
Medwedeff also had to sell MassMutual on the idea they should spend $300 million. Paradoxically, the recovery in the hotel business didn't make that job easier because the hotel was successful charging an average of $250 a night and had 80% occupancy on average in recent years.
But Medwedeff successfully argued the hotel could make as much as 30% more, on average, per room if it had the right corporate meeting space. He pointed to the Ritz-Carlton Beach Resort in Naples, where you couldn't get a room for less than $1,000 a night at the height of the busy winter season this year.
Medwedeff says it's critical for hotels to keep reinvesting in their properties, even during successful periods. He likens it to a treadmill: “If you stop, you're going backwards,” he says.
Medwedeff also monitored rates other hotels were getting, including The Breakers in Palm Beach and the Fontainebleau in Miami Beach. “We saw the rate potential they're capturing,” he says. “Now we can play that game.”
'Never wavered'
Collier County visitor statistics prove Medwedeff's theory. At the peak of the season in March, for example, revenue per available room in the county reached $318, the highest on the Gulf Coast. The hospitality metric, a function of average daily rate ($345) and occupancy (92.1%), rose 10.5% in March compared with the same month in 2014.
Indeed, Medwedeff's vision of the recovery in the corporate business is coming true. In particular, companies are splurging again on some of their best employees, what hospitality insiders call the “incentives” business. “That market really fell off during the recession,” says Wert. “It's come roaring back.”
One advantage for Medwedeff in the project is his 10-year tenure as general manager of the hotel — long enough to be considered a local. It's unusual for a manager to stay much longer than five years at a single hotel. Medwedeff is also active in hospitality industry associations,
Medwedeff, whose first hospitality job was as a night auditor at a Best Western in Maryland, has a quick smile and an easygoing, approachable nature. He's also a skilled operator, and was named general manager of the year for the entire Marriott chain in 2012.
Wert watched Medwedeff in action. “I attended a number of public meetings and he was on message every time. He never wavered,” Wert says. “He would talk to anybody who had questions; he wanted people to have the right set of facts.”
That's also the way Medwedeff runs his hotel. “He is an absolute hands-on manager, he's constantly walking the property talking to guests,” says Wert. “He knows his people, he calls them by name. That's really important.”
Humble roots
The Marriott on Marco Island had humble beginnings. It once was a 50-room inn where the Mackle Brothers' Deltona Corp. housed prospective buyers for lots on the island they had purchased for $7 million in the early 1960s.
Through the years the hotel added rooms and amenities to attract corporate travelers. Marriott operates the property today for MassMutual. “That's one of Bill Marriott's favorite properties,” says Wert. “It's great when the CEO feels like that.”
He's going to like it even better if Medwedeff has anything to do with it. The hotel, to display its renovations, plans to launch a marketing campaign with this tagline: The Art of More.
The first phase took three months this summer while the hotel shut down completely. “We had almost 1,300 workers here,” Medwedeff says. “It's been a whirlwind.”
The new meeting space will include a 30,000-square-foot ballroom with 24-foot ceilings, and 50,000 square feet of what Medwedeff calls “pre-function” space. That's where people congregate to network before or after a meeting.
The new space will be a vast improvement over the 46,000 square feet the hotel has now for meetings. And the adults-only tower above the new meeting space will give business clientele a break from the children and families staying at the resort.
But as much as Medwedeff is excited about the new facilities, his eyes really light up when he starts talking about the 12,000-square-foot entertainment center under construction. It will have bowling lanes, virtual-reality golf, 30-foot screens for watching sporting events and a bar and restaurant. “I'm a kid at heart,” he laughs.
Your free article limit has been reached this month.
Subscribe now for unlimited digital access to our award-winning business news.
Join thousands of executives who rely on us for insights spanning Tampa Bay to Naples.
