Published in Lodging Hospitality, Feb 1, 2012 8:38 AM, By Paris Wolfe
In the past two years, Innisfree Hotels pushed through a tough market to develop and launch the first new-build Holiday Inn Resort. Opened last February on Pensacola Beach, the 206-room hotel earned Innisfree IHG’s 2011 Developer of the Year Award for mid-scale brands.
“The Holiday Inn Resort is a new concept,” says Innisfree CEO and founder Julian MacQueen. “We got the award because it was so difficult to do. In the capital markets the timing was difficult. Everything had shut down except our deal. I think that was one of the ingredients that allowed the hotel to be recognized.”
MacQueen says the hotel may be a prototype for future Holiday Inn resorts. “We’re the first purpose-built Holiday Inn resort in the chain,” he adds. “This could be the beginning of something big with IHG getting a resort brand going in the middle market. They feel this might be a great prototype for a new line of hotels.”
“The concept is kind of a fun,” says MacQueen. “We built a lazy river that runs 1/8 mile. We bring mermaids and pirates out to the pool to play with the kids. Instead of drive-in movies, we have dive-in movies–you can sit in the swimming pool and watch a movie.”
With an average daily rate of $138, the resort is in reach for the average leisure traveler. That, perhaps, explains a 70 percent occupancy rate for its first year. “That’s exactly what we projected,” says MacQueen. “It’s nice when you do what you say you’re going to do.”
Bringing the hotel online was rife with challenges. Just as the design for the new hotel was complete in spring 2008, the lender — a regional bank — pulled the funding three weeks before closing.
“We went to 49 different lenders before finding the right combination,” he says. “That was pretty difficult to pull off in a very difficult time. It took a special relationship, a special combination of lenders. That’s what made this one pretty remarkable.”
Innisfree put together a $38 million financing package working with Pen Air Federal Credit Union, Navy Federal Credit Union and Superior Bank in Birmingham, AL. The company had already owned the real estate where the hotel was to be built.
“We had to get the commercial lender over a prejudice against credit unions,” says MacQueen. “We were able to convince the bank that these credit unions had plenty of capital. But, they couldn’t manage a construction loan like a commercial bank could, so the bank is the lead and managing the financial package.”
With money in hand, they faced a general contractor fail. The contractor was going bankrupt, necessitating a new contractor relationship. Then came the BP oil spill in the Gulf of Mexico.
“That was particularly horrible,” says MacQueen. “We hired a director of new media marketing to take advantage of emergent digital marketing opportunities such as social media. President (of Innisfree) Harlan Butler visited the Holiday Inn Reservation Centers and got everybody excited about the hotel. We held media events and sponsored a rock concert. We did a hard presale.”
The Pensacola Beach property also benefitted from the local convention and visitor’s bureau advertising that was supplemented by BP’s dollars. As a result of all the marketing efforts, the hotel had $1.2 million worth of business booked before it opened.
One year later, the award-winning hotel is doing a healthy business and Innisfree is building another project with the same lenders. In planning since 2008, the 127-room Hyatt Place Hotel at the Pensacola International Airport broke ground in January. The new hotel, attached to the terminal, is part of a larger “Airport & 12th” project that will include office and retail on a 12-acre site. The land is leased from the city.
“We think it’s a good location and a good time to build if you’re lucky enough to find the capital. We have a fairly unique situation with some credit unions,” he says, noting that Pen Air Credit Union and Navy Federal Credit Union were so pleased with their investment in the Holiday Inn Resort they’re back for the new $24 million project.
With most flags taken in the airport market, MacQueen did his due diligence. “We went to look at IHG and Marriott, but both of those products were in the market already. We looked around at other options. We started conversations with Hyatt. We needed something between a three- and four-star that would compete strongly with the local Hampton and Hilton Garden Inn. We just fell in love with the Hyatt Place brand.”
“It’s a corporate property, very smart, very edgy,” he says. “It has that kind of Starbucks feel in the lobby. It’s what the upwardly mobile millennium [traveler] is looking for.”
Innisfree is going with Hyatt’s prototype for the brand. “We’re not trying to anything beyond their prototype. It’s a great size for that market. We think it’s going to be a super success.”
Today Innisfree owns and manage numerous hotels in the southeastern U.S., including six Gulf-front resorts in Florida and Alabama.