Driving for dough in Florida's golf resort industry
Sheila Johnson's betting big on Florida golf.
Sheila Johnson's big move into Florida's golf resort industry began with a cold call.
In 2007, Sheila Johnson, co-founder of Black Entertainment Television, found her longstanding plans to build an equestrian-inspired resort near her home in Middleburg, Va., stalled.
Approvals for the project had taken longer than expected, she says, and the "crackerjack" team of hospitality veterans she'd hired to run the resort needed something "to keep them busy."
Meanwhile, about 900 miles away, in northern Pinellas County, the Innisbrook Resort, one of Florida's best-known golf retreats, was struggling to regain its footing after the 2001 recession. Then-owner Golf Trust of America was hoping to sell Innisbrook as it liquidated its nationwide portfolio of golf courses, and a broker called Johnson to gauge her interest.
"I had no intention of getting into the golf business," Johnson says. "I know what a driver looks like. I know what a putter looks like. That's about it." She was interested enough, however, to fly to Florida to take a look at the resort.
Initially, Johnson was impressed by how much work needed to be done. "It was in such deterioration," she recalls. "The buildings had not been touched. The golf courses looked rough. And I think most importantly, there was a staff of people who had been there from the beginning and who looked so sad."
It had been a steep fall for Innisbrook, which opened in 1970 as one of Florida's first condominium golf resorts, with privately owned units doubling as hotel accommodations. The original majority owners, brothers Stan and Brent Wadsworth, partnering with fellow businessman Harvey Jones, commissioned Larry Packard to design four courses, including Copperhead, which gained a national reputation amid praise from both amateurs and PGA Tour players such as Ernie Els, who once called the course "certainly the best we play in Florida."
The Wadsworths owned Innisbrook until 1997, when a company called TM Golf Hosts bought it for $66 million. TM moved to expand but burdened Innisbrook with debt. In 2004, after falling behind on more than $100 million in loan payments, TM handed the resort to lender Golf Trust of Charleston, S.C., which forgave the loan in return. Both companies valued the resort at $44 million.
By 2007, Innisbrook was "in virtual bankruptcy, losing a tremendous amount of money," says Prem Devadas, president of Johnson's Salamander Hotels & Resorts.
Golf fan or not, Johnson saw an opportunity to "really improve the property and make it work." She and her team got a "very good deal," purchasing the resort for just $35 million. "You had tremendous fundamentals in place, including a great location outside of Tampa-St. Petersburg and irreplaceable golf assets," Devadas says.
Johnson decided to operate the resort under her own, independent flag - Salamander Hotels & Resorts. She moved quickly to revitalize the 900-acre property. At a news conference in July 2007, with bulldozers standing ready, Johnson announced into a walkie-talkie, "Commence construction!"
"The membership had been through so much. Through different owners, they were let down, and there was a lot of uneasiness and mistrust," she says. "I wanted to send the message that they had a new owner who's really serious."
Over the next two years, she spent about $30 million adding a 12,000-sq.-ft. spa and 4,000-sq.-ft. fitness facility along with a pair of 16-seat executive boardrooms; an upscale steakhouse and gourmet market; an expanded clubhouse for registration, dining and shopping; children's playground; and new furnishings for 65,000 square feet of indoor event space.
"Thank goodness she came down, fell in love with the bones of the property and saw the potential," says Innisbrook spokeswoman Ramona Hurley, who has worked at the resort since 1989 and has seen three ownership changes. "Everything right down to the flatware and chafing dishes had to be replaced."
Johnson maintained the renovation schedule even as the recession hammered Innisbrook's sales. After declining in 2009 and 2010, revenue has returned, slowly, to pre-recession levels. Last year, sales rose 5% to $36.7 million - which, along with cost controls, enabled the resort to cut its annual losses in half to $835,388. (After adjusting for non-cash expenses such as depreciation and amortization, Innisbrook had an operating profit of $2.4 million.)
Steve Ekovich, a Realtor who specializes in golf course properties for Marcus & Millichap in Tampa, says Innisbrook was "just tired and needed rejuvenation." Along with deep pockets, Johnson had the management expertise and vision required for a turnaround, he says. "The image of the asset has been repaired to what I would consider to be one of the pre-eminent resorts in the country."
While the effects of the recession have mostly receded, Innisbrook still faces challenges. U.S. demographic changes don't bode well for golf course operators. A key metric - the number of rounds played nationwide - fell last year to its lowest level in almost two decades. About 200,000 players under age 35 left the game. And for the eighth straight year, more courses closed than opened, affecting mostly public-access facilities. "Fewer and fewer young kids are taking up the sport," says Matt Galvin, president and CEO of Morningstar Golf and Hospitality in Princeton, N.J.
But for the time being, Galvin says, the sport's base of about 25 million golfers is big enough "to keep some properties operating well."
Innisbrook benefits from a "large and steady base" of condo owners who live or vacation there, he says. Of 940 privately owned condos on the property, more than half double as hotel accommodations. Salamander, as manager and marketer, gets 60% of the rental revenue, and the rest goes to unit owners.
The resort offers a spa and other amenities to attract non-golfers. And while Innisbrook lacks the marketing clout of a global hospitality brand, the Copperhead course - the site of the PGA Tour's Valspar Championship in March - maintains the resort's visibility and attracts hard-core devotees.
Johnson, in fact, has doubled down on Florida golf, forming a partnership with real estate equity firm Lubert-Adler to manage the Reunion Resort near Orlando and Hammock Beach Resort in Palm Coast. The partnership markets Innisbrook and the other two resorts as a trio - the "Grand Golf Resorts of Florida," with nine courses stretching from the Atlantic Ocean to the Gulf of Mexico.
Devadas, who joined Salamander in 2005 from a company that owned and operated Kiawah Island Golf Resort in South Carolina, says the three Florida resorts enjoy consistent growth in both rounds played and golf fee revenue.
The key, he says, is that Salamander oversees all aspects of the resorts' operations, ensuring that not only the golf, but also the food, accommodations and overall service, are up to par. "It's about creating a great seamless experience and knowing how to market it, and that's what we do," he says.
The company now is developing Tryon Resort in the Foothills region of western North Carolina, with a new equestrian center, spa and Arnold Palmer-designed golf course among its featured amenities.
Johnson also is considering other projects, including one in Florida. Although details are still being worked out, it involves a new resort development in the Panhandle.
"We just got a call on it," she says. "We do love the beach there, and we're exploring it."
Meanwhile, Johnson's stalled equestrian resort finally got out of the gate. In summer 2013, after a decade of planning, she opened Salamander Resort and Spa, a 168-room hotel on 340 acres of Virginia horse country. Johnson says her daughter, Paige, is a champion equestrienne. A classical violinist, Johnson downplays her own horse-riding skills - "at best, I trail ride," she says.
Sheila Johnson: Many Hats
- Sheila Johnson, 65, co-founded Black Entertainment Television in 1979 with then-husband Robert Johnson. Viacom bought BET for $3 billion in 2000, and the Johnsons divorced two years later. Forbes estimated her net worth at $400 million. Her business-related activity includes work as an entrepreneur, film producer and philanthropist.
- Founder and CEO of Salamander Hotels and Resorts, a privately owned company based in Middleburg, Va.
- President and managing partner of the WNBA’s Washington Mystics and vice chair of Monumental Sports & Entertainment, which includes the NBA’s Washington Wizards and the NHL’s Washington Capitals.
- Partner in Project Aviation, specializing in aviation consulting, acquisitions, management and charter services.
- Producer of four documentary films, including The Other City, about the AIDS epidemic in Washington, D.C., and a 2013 feature film, The Butler, starring Forest Whitaker and Oprah Winfrey.
- Member of the U.S. Golf Association’s executive committee, the Board of Governors of Parsons The New School for Design in New York and the Leadership Council at Harvard Kennedy School’s Center for Public Leadership.
Some recently renovated resorts.
Boca Raton Resort & Club
- Location: Boca Raton
- Accommodations: 1,047 rooms
- Amenities: Two 18-hole golf courses, 30 tennis courts, 50,000-sq.-ft. spa, seven pools, 32-slip marina and a half-mile of private beach
- Recent changes: Undertook a $30-million remodel of its Cloister building, with $100,000 spent per room on new amenities, including rainfall showers. Other improvements include a renovation of the ftness center and introduction of "Boca Surf," featuring a FlowRider wave simulator.
Hilton Sandestin Beach Golf Resort & Spa
- Location: Miramar Beach
- Accommodations: 602 rooms
- Amenities: 20,000-sq.-ft. beachfront deck, 32,000 square feet of indoor meeting space, six restaurants, three pools, spa and fitness center.
- Recent changes: Completed $12.5 million in renovations as part of a multiyear remodel. Refurbished all 202 rooms in its Spa Tower, redesigned an indoor pool and enhanced the main lobby's ocean view. Also refreshed two restaurants and 11,000-sq.-ft. spa.
PGA National Resort & Spa
- Location: Palm Beach Gardens
- Accommodations: 369 rooms
- Amenities: 90 holes of golf on five courses, health and racquet club with clay tennis courts, nine pools, 40,000-sq.-ft. spa, seven restaurants and lounges and a lakeside wedding venue.
- Recent changes: Returfed its Champion course - site of the PGA Tour's Honda Classic - and redesigned the bunkers to improve amateur golfer pace of play. The 62 new bunkers also include a revamped drainage system.
The Shores Resort & Spa
- Location: Daytona Beach Shores
- Accommodations: 212 rooms
- Amenities: Oceanfront restaurant, saltwater pool, spa, fitness center and 20,000 square feet of indoor and outdoor event space.
- Recent changes: Began a property-wide renovation, including technology upgrades, the addition of a private dining room with seating for up to 20 people and new carpeting in all rooms and corridors. Converted 14 rooms into private outdoor lounge areas, called "cabana suites," with Tvs and ceiling fans. Eleventh-floor meeting rooms and a 6,895-sq.-ft. ballroom also will be refreshed.
LaPlaya Beach & Golf Resort
- Location: Naples
- Accommodations: Nearly 200 rooms and suites
- Amenities: David Leadbetter Golf Academy, four pools, 4,500-sq.-ft spa and fitness center, Baleen restaurant and bar.
- Recent changes: Completed a million-dollar overhaul of its meeting and wedding space, adding new bent-glass chandeliers, carpet and art by southwest Florida photographer R.J. Wiley.