Room Change

REVIEW SUMMARY
Company. BayStar Hotel Group, Tampa
Industry. Hospitality
Key. Focusing on internal operations during development halt

Back in the days when cash flowed freely, hotel development and sales seemed easy. Vacationing families and business travelers were eager to book rooms, allowing hotels to enjoy high occupancy and making them attractive to commercial real estate investors.

George Glover remembers those days all too well, having spent more than four decades in the hospitality industry. Unfortunately, he has also seen how quickly those fortunes can turn with a bad economy. As part of that change, Glover has had to adjust from building and selling to helping mortgage holders continue operating their properties, along with his own.

“The slightest thing just makes folks very nervous,” says Glover, who founded BayStar Hotel Group in 2000 and is its chairman and CEO. Lately, he says, the high price of gas is forcing frequent guests to postpone or cancel reservations.

BayStar specializes in limited-service hotels, or those that may offer food and beverage but not room service. It currently owns five properties statewide: two Holiday Inn Express hotels in Largo and Lake Buena Vista, a Holiday Inn in Tallahassee, a Hampton Inn in Largo and a Hotel Indigo in downtown St. Petersburg that was converted from the historic Heritage Hotel. It also runs a Holiday Inn Express in Dunedin under a consulting contract.

“Our sweet spot has always been niche markets that were underserved and had need and dimension,” Glover says. “Those kind of dried up.”

Build one, buy one, sell one
While BayStar's prior goal each year was to build a hotel, buy one and sell one, it has been forced to adjust to the recession. A lack of financing continues to stymie construction, few suitable properties are open for acquisition and low prices for commercial properties are giving willing sellers second thoughts.

The current market isn't helping matters, with average hotel occupancy in the Tampa Bay market reaching only 65% in April, according to Smith Travel Research. BayStar's own hotels currently average around 50% occupancy, with asking room rates at or just above $100 per night, Glover says.

Holding the line on rates is getting more difficult, he says, because larger upscale hotels with greater room capacity are reducing prices to match or beat those for limited-service rooms. Seasonal factors also don't help, whether it's an unusually cold winter that keeps snowbound visitors away or an Easter season that reached into late April this year.

Given all of this, Glover says it makes more sense to focus on its five current properties. Internal improvements include upgrading technology within hotel operations, mainly by initiating a hotel productivity tracking system that allows charting of maintenance and housekeeping progress in cleaning and changing over rooms. A new thumbprint time clock system has been added that no longer requires full hand scans.

BayStar has also hired a social media “czar” to operate its hotels' pages on Facebook and other sites, teaching staffers how to set up and use those systems. New websites have also been rolled out for the individual hotels in an effort to entice guests to book reservations directly, though Glover says the corporate hotel brands largely dictate what can be done on the Web.

A significant investment is being made into upgrading television sets in rooms by installing HDTVs at roughly $500 each, according to Glover. The TV sets must also include a special computer chip that allows guests to order pay-per-view and other hotel services, adding between $100 and $150 to the cost of each set, he says.

“We've done a lot of stuff to get our house in order and get ready for business to improve,” Glover says. He notes that the 150-room Holiday Inn State Capitol East in Tallahassee, which BayStar bought for $6.3 million in 2006, has received $750,000 worth of upgrades such as new bedding in order to earn the iconic chain's new updated brand.

Sticking with Holiday Inn
Glover began his hospitality career as a bellhop at what is now the Holiday Inn SunSpree Resort in Clearwater Beach, then was hired as assistant general manager at its Vail, Colo., hotel before later becoming district director of the chain.

In 1983, Glover became president and CEO of Wilson Hotel Management Co., a Memphis-based division of the companies owned by Holiday Inn founder Kemmons Wilson. He assisted with development and marketing of two new concepts, Wilson World Hotels and Wilson Inns. During those years he owned and operated more than 30 properties, and held those positions until he launched BayStar.

Making the transition from hotel developer to operator wasn't much of a stretch for Glover, who says BayStar has had experience with the latter all along. Most recently, his company took on management contracts for two area hotels, the 157-room Lakeland Hotel and Conference Center (formerly a Holiday Inn) and the 117-room St. Petersburg Clearwater International Airport Inn, which used to carry the Best Western flag. Tampa-based Bay Cities Bank foreclosed both properties and needed someone to run the hotels.

Greg Bryant, Bay Cities president and CEO, says he has long been familiar with BayStar since financing previous hotel building projects. The simple fact is that banks don't have the time or knowledge to run hotels while they are on their books.

“A hotel is not like repossessing most properties. You're basically running a business,” Bryant says. “A lot of efficiencies can be achieved, but a lot more money can be wasted if you don't know what you're doing. These guys are good at it.”

Bryant says BayStar has done a “tremendous” job learning each property's staffing and equipment needs, and taking over reservation systems. He adds that the Lakeland hotel has now been resold, though at a much lower price than Bay Cities hoped to get.

Success with Indigo
While BayStar's last new hotel opened two years ago, a 95-room Holiday Inn Express in Largo, it has found a potential success story in its St. Petersburg hotel conversion. It bought the Heritage Hotel for $7 million in 2008, then spent $3 million more on renovations to reopen it the following year. The three-story, 76-room hotel on Third Avenue North features hardwood floors, flat-screen TVs, floor-to-ceiling murals, spacious showers in place of the hotel's old tubs, and a fast-casual gourmet restaurant serving breakfast and dinner.

Hotel Indigo is a newer upscale concept by Holiday Inn's parent company, InterContinental Hotel Group. The chain has only 42 locations worldwide, including a half-dozen in Florida, with St. Petersburg being its only Gulf Coast location. (Plans to develop an Indigo in Tampa's Channel District are on hold indefinitely.)

Glover says the St. Petersburg Indigo has had mixed results so far: “From a critical review standpoint, it has been a hit. From a profitability standpoint, it has yet to achieve a stabilized occupancy level, though we're getting closer.”

Greater promotion of the brand would help as IHG continues to penetrate key hospitality markets such as London and New York, says Glover, who serves on the chainwide Indigo committee for IHG's hotel owners and operators. He says discriminant hotel guests respond well to boutique hotels offering a cut above the usual.

“They're tired of the same old beige box,” he says. “They're looking for something new, something different. They will pay a little more, but not a lot more.”

In St. Petersburg, Hotel Indigo features exhibits by local artists, with Janice Campbell's works now on display. It also makes bicycle rentals available to those who want to explore downtown, and even offers ground transportation in a converted London cab Glover says he bought for $24,000 on eBay from a Dallas limousine service.

“It's a fun hotel to operate,” Glover says. He adds that St. Pete's hotels are getting good traction this year following the opening of the new Salvador Dali Museum on the city's waterfront and the on-field success of the Tampa Bay Rays as one of baseball's leading teams.

That may be enough to keep Glover in the hotel business for a while longer, though he admits he doesn't know what else he would do if he weren't doing this. “I still love what I do,” he says, “and I still have fun.”