Leading Question

Q. Are there enough rooms in the inns?

After years lamenting the loss of hotels and motels to condo conversions, tourism officials say the market is shifting. Two hotels (the 100-room Hotel Indigo and the 73-room La Quinta Venice) will be opening in Sarasota this year, and at least 12 other hotels are in various stages of planning. Together, they potentially add more than 1,000 rooms in Sarasota and Manatee in the next several years.

According to an estimate by the Sarasota Convention and Visitors Bureau, 19 hotels and motels were closed or demolished in Sarasota County since 2001, a loss of 609 rooms. The majority of them were on or near the water, and their loss was thought to be inevitable as property values, zoning changes and rising costs of waterfront construction made it less profitable to maintain or build hotels than to sell to condo developers. But hotel development has become hot again; and banks, traditionally leery of financing the construction of hotels, have loosened their purse strings.

"This is the first time in my career that lenders will talk about hotels. Valuations are way up," says Charles Githler, who attended the International Hospitality Industry Investment Conference in New York earlier this summer. Githler, co-owner of the 294-room Hyatt Sarasota, (which is being sold to WCI for a 200- to 250-room high-end condo hotel that will rival The Ritz-Carlton, Sarasota, in quality), plans to build a 185-plus-room, full-hotel Embassy Suites on his property along North Tamiami Trail where the Yacht Center is being developed. "If you owned a hotel last year, it went up 35 percent in value in 2005."

Art Eckert, president of S.S. Appel & Company, will break ground on a 77-room Manor House Inn and Suites off S.R. 70 near I-75 next August or September for a market he describes as the transient traveler and corporate executive. Nineteen of these rooms will be condo hotel units, selling at $172,000 to $300,000 per room. He sees them as smart investments: They're affordable, and they will bring in income when owners don't want to use them.

"Look at occupancy rates for hotels in the area," he says. "In 2005, it was 83 percent. That is very good. Anything above 65 percent is pure profit. The rate structure of Q1 of last year was $109 a night; this year in Q1, even though occupancy was at 79 percent to 80 percent, rates were $145 a night. Hotels aren't sacrificing rates to fill their rooms. People are willing to pay for quality." (Sarasota's average room rate in February and March 2006 was $200 a night.)

And banks, he says, like the condo hotel concept. "A typical hotel operation, for the first five to seven years, is really scrambling to cover debt service," he says. Not so with a condo hotel, where buyers reduce the risk to banks and the developers' loan costs.

Susan Estler, director of marketing and public relations for the Bradenton Convention and Visitors Bureau, says she's seeing a shift to condo hotels in Manatee as well, where hotel inventory mostly has been one of boutique hotels; the Holiday Inn on Longboat Key, with its 146 rooms, was the only brand-name hotel to close. Many of the smaller hotels have managed to survive by changing to "condotels," she says. "There's been no loss of revenue. It's just a new way of doing business, and the consumer doesn't know the difference."

But all these new rooms do leave some questions hanging. Virginia Haley, the executive director of Sarasota's CVB, says she's thrilled with all the new hotel rooms. Downtown and mainland hotels do satisfy some visitors, says Haley, especially now that downtown Sarasota has become more of a destination. But the region's most famous asset is its beaches, and very little product is available out there. "It's time to get the community together for the big picture, take a look at our product and see what we want," she says.

And Githler sees an irony in all this good fortune: "Are we going to flood the market with rooms?"-Susan Burns

NO RESERVATIONS
After losing 609 rooms since 2001, hotel developers are proposing to add more than 1,000 rooms in the next several years.

MY FIRST JOB
interviewed by Abby Weingarten

Draft Account
Banker Rip DuPont learned his people skills in the Army.

Rip DuPont is CEO of First National Bank & Trust and chair of the Manatee Chamber of Commerce and the Manatee Community College Board of Trustees.

"Three weeks after graduation from [the University of Richmond] in 1967, I was drafted by the Army. I had a double major in English and history, and I thought, because I was a college grad, they'd have me pushing buttons or working in an office. But they gave me a rifle. I was a private in the infantry. I had my orders to go to Vietnam as cannon fodder in early 1968. My orders were changed at the last minute when the North Koreans captured the Pueblo, and I was sent to South Korea.