Battling back
Mississippi Gulf Coast’s hotels slowly reopen
BILOXI AND GULFPORT, MISS.—One year after Hurricane Katrina slammed into the Mississippi Gulf Coast, the hotel industry is making a slow, but steady recovery. Casino hotels have been the quickest to rebound, but the remains and wrecked shells of hotels and motels lay all along the coast.
Managers and proprietors in the area said housing, development and insurance issues present major challenges in their road to recovery, but progress is being made.
“I would say that [progress] is actually going better and faster than we anticipated,” said Linda Hornsby, executive director of the Mississippi Hotel & Lodging Assn. “When you walk into some of these larger hotels that have reopened, you would not know that anything has happened.”
On Aug. 29—the one-year anniversary of the monster storm—the 32-story, 1,740-room Beau Rivage reopened its doors after a year of clean-up and renovation. Although designed to withstand a category 5 hurricane, the resort’s first two floors were overcome by the towering surge. Its opening has been a boon for the local economy and tourism industry and serves as a testament to the coast’s future. The newly-remodeled megaresort features seven restaurants, four bars and lounges, retail shops and an 85,000-square-foot casino.
More than a half dozen other casinos have opened along the Gulf Coast and are welcoming back gamblers in droves. Karen Sock, senior v.p. and g.m. of the 494-room Grand Biloxi Casino, Hotel and Spa, reported that bookings have been stronger than they were pre-Katrina.
As of early September, 54 percent of the area’s 17,340 rooms were back in inventory, according to the MH&LA. Casino-hotels represented more than half of the 9,500 operating rooms. According to a MH&LA report, more than 65 lodging properties along the state’s coast were classified as “completely destroyed.” Independent motels and franchised brands such as Comfort Inn, Motel 6, Days Inn & Suites and Ramada were included in the wreckage.
While all that remains of most of the smaller hotels are bare slabs, a few are rebuilding. Mike Lerner, owner of the Balmoral Inn, said his Biloxi beachfront property suffered moderate damage from the surge and flying debris. After six months of rebuilding and making repairs, he reopened the property in March, but he changed his one-bedroom suites to one-bedroom “apartments” with leases to cater to the changing market. Most hotels catered to tourists and gamblers pre-Katrina, but the focus has shifted to providing temporary housing for area residents and clean-up crews.
“Right now there is such a housing crunch,” Lerner said. “Little by little more motels are opening, but there really aren’t any apartments available. I’ve basically turned my rooms into corporate rentals now.”
The 225-room Gulfport Beachfront Hotel was a Holiday Inn when Katrina rolled into the area. The first floor, including the lobby, restaurant and lounge, was submerged by Gulf waters. General manager Peter Magee said the hotel reopened in mid-October but is still operating the lobby out of room 217 on the second floor.
“Right after the storm, we were packed with [Federal Emergency Management Agency] workers and insurance adjusters,” he said. “The bottom fell out of that market in April, then we got a lot of faith-based relief workers and construction crews.”
Magee is staying at the hotel because of a lack of housing. Out-of-state contractors who have come into the region have even resorted to building their own apartment buildings to house workers. The result is that businesses all across the region are experiencing a labor crunch.
“Staffing is an issue across the whole hospitality spectrum,” Hornsby said. “The chain [of who gets employees] goes down from casino hotels first because they can offer benefits and more pay.”
Hornsby pointed to rapidly increasing condo development as a great way to rebuild the coast, but one that also will quickly decrease the hotel room inventory in the region. She said that many of the damaged smaller properties are being bought by developers who are turning them into condos.
“One- or two-bedroom condos will typically take up the space of three or four hotel rooms. When it replaces hotel inventory, it results in negative growth,” Hornsby said.
Insurance also has become a critical factor in the rebuilding of the region. Bob Bennett, owner of the 65-unit Edgewater Inn in Biloxi, said that even though his hotel sits 28 feet above sea level, the powerful storm surge managed to put two feet of water in 10 of his rooms. Bennett, who is also a general contractor, built the hotel himself in 1987 and designed it to withstand a storm as powerful as Hurricane Camille (a category 5 hurricane that struck the region in August 1969). Because the property has no debt, Bennett does not carry wind damage insurance on the property.
“If you built it right to withstand 350 mile per hour winds, there’s not much that can happen that I can’t fix,” Bennett said. “With two year’s premiums, I’m out front anyway. There’s no point on throwing money away.”
He said some of his fellow property owners have seen their windstorm coverage premiums rise by more than 250 percent. Lerner said he still is negotiating settlements on two insurance policies.
“Even though you think you’re covered, you’re really not.” Lerner said. “When you get insurance, you get one page that tells you what you’re covered for and how much. Then there’s a hundred pages of reasons why they don’t have to pay.”
Source: Craig Guillot, Hotel & Motel Management