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Deal may clear way for two resorts

But the settlement of lawsuits may occur at the nadir of the tourism and travel business.

By CHRISTINA HEADRICK

© St. Petersburg Times, published September 27, 2001


But the settlement of lawsuits may occur at the nadir of the tourism and travel business.

CLEARWATER -- Beach hotelier Tony Markopoulos is on the brink of settling four lawsuits that have blocked the creation of a luxurious, 250-room Marriott resort on Clearwater Beach since spring, city officials say.

The settlement -- to be approved as early as next week -- would allow Markopoulos to develop his own 465-room resort and condo project. In exchange, Markopoulos would drop voluminous lawsuits challenging the deal the city made with the developers of the Marriott Seashell Beach Resort.

Yet the good news is now shaded by other concerns, chiefly whether either resort is still viable as long as America's tourism and travel industry is reeling from the Sept. 11 terrorist attacks in New York and Washington.

The developers of the proposed Marriott certainly have felt terrorism's impact.

"Unfortunately, the economy was already wimpy" before the attacks, said Bill Kimpton, leader of the Marriott's development team. "Now I don't know where Marriott is in terms of how all of this affects them. . . . We're definitely in a recession and the tourist industry has been slammed."

Before the assaults, hotels had been hurt by a sluggish economy, according to industry analysts. Marriott International, for instance, had warned investors to expect a 7 to 10 percent drop in room revenues in the third quarter. The hotel giant said it would reduce rates up to 40 percent at nearly 1,500 properties to attract guests.

Then Sept. 11 brought a drastic downturn in travel, which could cost the country's lodging industry as much as $2-billion this year, according to Smith Travel Research, which tracks the industry.

Locally, Russ Kimball, manager of the Sheraton Sand Key Resort, said occupancy rates for September on the beach have been the lowest he has ever seen, "crashed down to almost nothing." Some beach business people have resorted to e-mailing other residents to encourage them to patronize businesses hurting from the attacks' impact.

Some lodging companies have postponed plans to renovate or build new hotels, and some have suggested they may need government help, similar to the $15-billion bailout the airline industry has received.

"I can tell you things are pretty bad right now, particularly in the higher-end properties," said Duane Vinson, a research analyst at Smith Travel in Tennessee.

The lodging market is expected to turn around by the third or fourth quarter next year, so opening a hotel in two years or so may be an okay investment, Vinson said.

Still, Marriott International officials were among those who told reporters recently that they might have to reconsider new projects, while taking other cost-cutting measures such as closing restaurants and other parts of hotels. Marriott officials did not return calls Wednesday about the Clearwater project.

"We may have to revisit how to get this done," Kimpton said. "There's a lot of serious questions here."

Markopoulos declined to provide details Wednesday about his project. But he clearly has big ideas that may be affected by the economy.

According to the proposed settlement, Markopoulos wants to build the resort and condos where he owns the Days Inn and other motels south of the roundabout. He would be allowed to build 250 more hotel units than currently permitted there.

Previously, Markopoulos wanted the city to close part of Gulfview Boulevard so his resort could be built on the beach. The city rejected the idea after a public outcry.

Now the proposal is to redesign Gulfview around Markopoulos' property. Part of Gulfview would be made a two-lane, southbound, one-way street. Markopoulos would be responsible for financing road improvements near his property.

In addition, Markopoulos is redesigning his proposed hotel so it appears less imposing than the 150-foot-tall project he suggested earlier this year, city officials say.

Charlie Siemon, the city's redevelopment consultant, said he thinks the proposed hotels are still possible to build, although it may be more difficult.

If banks aren't willing to finance such projects now, there are other options, Siemon said. Developers could seek investors to finance rooms, buying into the project as if it were a condominium. (It would still look and be operated as a hotel.)

One plus is that the Clearwater Beach market is ripe for new rooms, Siemon said.

"My sense from specific conversations within the industry is that quality products in underserved markets within the United States probably won't be that affected," he said.

-- Times news researcher Kitty Bennett contributed to this report.

PROPOSED CLEARWATER BEACH RESORTS

TONY MARKOPOULOS' PROPOSAL

Status: Awaits approval. Redesign to be unveiled.

Location: 100-200 blocks of S Gulfview Blvd.

Operator: Unknown, city requires big name.

Size: 465 hotel rooms and condos on 3.2 acres

Value and height: Not yet released.

Proposed schedule: Under construction by 2005.

Perks from city: Gulfview converted to one-way street for several blocks and pushed away from project. City would lose parking spaces at Pier 60 and beachfront. City to allow 465 units, 250 more than now allowed. That could require regional and state approvals.

Concessions to city: Lawsuits stalling Marriott to be dropped. Offer to build 400 public parking spaces if city desires. Must finance roadway improvements to Gulfview beside property and build a new First Street.

SEASHELL BEACH RESORT

Status: Approved in March, stalled by lawsuits.

Location: 200-300 blocks of S Gulfview Blvd.

Proposed operator: Marriott International

Size: 250 rooms, 1.6-acres

Value: $65-million

Height: 150 feet

Schedule before delays: Open fall 2003

Perks from city: Gulfview moved west and beautified. City to tear up beachfront parking for this. City to allow 250 rooms where 65 now permitted. Third Street to be given to the developers.

Concessions to city: 400 parking spaces to be built by developers for public within hotel. Developers front the costs for the street improvements beside their property.

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