Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, July 11, 1993 TAG: 9307120252
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: HOT SPRINGS LENGTH: Long
\ Henry Fry worked at The Homestead resort here for 13 years before he opened his home improvement business. His wife, Cynthia, still works at the resort, as assistant manager at its Cascades Inn.
The vacation homes that have clustered around the 100-year-old resort and the homes of many of its 900 or so employees provide Fry with business.
"The whole county works at The Homestead," he said.
That's not really true. But there are fewer than 5,000 residents in the county of Bath; 2,100 of them in the work force.
And it's an effort to find anyone who has no connection to the 600-room hotel or the several restaurants, spas, golf courses, stables and other facilities owned by Virginia Hot Springs Inc.
The Homestead is the engine that drives the county. Even the ABC store thrives because of the resort, which must buy its liquor through it.
Now, though, the engine is sputtering. The Homestead is on the verge of bankruptcy, and Club Resorts Inc., a potential deep-pockets savior from Dallas, will buy it only if the workers don't unionize.
Henry Fry puts it bluntly: If the hotel goes under, he worries his business will, too.
Dan Ingalls, president of Virginia Hot Springs and a member of the family that has controlling interest in the resort, would seem to agree.
"There isn't another gig here," Ingalls says.
Fry and others see a soap opera at The Homestead where the plot can go many ways.
Workers say management has treated them poorly by not keeping them informed and by what appear to be arbitrary firings of longtime staff. The workers also say the resort cuts the hours of local residents in favor of workers from Jamaica and the Philippines.
A union election is scheduled for July 30 and some 900 full- and part-time employees are eligible to vote on whether they want representation by the Hotel and Restaurant Workers Union.
If Club Resorts, a private company that has proved it can turn ailing properties around, walks away from the deal, the resort owners don't have many options. Few companies can come up with the $30 million to $50 million needed to rescue The Homestead.
Ingalls won't give specific figures on its losses. But he said The Homestead had almost $31 million in revenue in the fiscal year that ended in March, and that wasn't enough to pay its bills.
Its owners have subsidized the operation for several years, says Ingalls, whose great-grandfather, M.E. Ingalls, was one of the original investors.
Two years ago, the board sold the Virginia Hot Springs Telephone Co. and used the profits to offset The Homestead's losses. Last year, shareholders traded money for more equity to raise money to offset losses. In January, the board kicked in a loan, and made it clear that was the "last contribution," Ingalls said.
\ Problems at The Homestead are nothing new. As a private company, it went bankrupt in the late 1930s. It reorganized as a public company.
Ski facilities were built in 1959 to expand the resort's season on the theory that if The Homestead could halve its winter losses, it would double its overall business.
It helped. Christmas at The Homestead is a sellout. It's when the place most "feels like family," Ingalls says.
A contemporary wing with 200 rooms and a conference center was built for $8 million in the early 1970s. Ingalls says some of the debt from that expansion is still around.
"We had to thrash around to get business," Ingalls says. But business was generally good from 1975 to 1985, when the national economy was also good. But the thriving economy also brought more competition to The Homestead, eroding its stable "carriage trade" base.
"We're high end. People who come here could also go to Hawaii, the Bahamas," Ingalls says.
Daily room rates for double occupancy range from $190 to $345, depending upon the season.
The Homestead's business has been cyclical all along, mainly reacting to changes in vacation lifestyles and the national economy, but also to revolving-door management.
Daniel H.H. Ingalls, chairman of the company, was a professor of Sanskrit at Harvard University and didn't get involved in the management until the man who had been president of The Homestead for eight years left abruptly in 1985.
The elder Ingalls handled hotel business on weekends until his son, Dan, was lured from his role as chief engineer for Apple Computer Inc. in California's Silicon Valley.
He took over the resort part time in 1987, when it was fresh from a profitable year. The Homestead earned $1 million in 1986, after losing more than $200,000 in 1985.
Dan Ingalls says he came to the hotel "not because I thought I could save it, but I thought I could be an element of stability."
The stability hasn't been easy to achieve. Since 1985, for instance, there have been five top managers.
Changes in management meant changes in other jobs, and the result was a loss of sales momentum.
Luca Di Cecco, founding director of Garth Newel Music Center in nearby Warm Springs, said the hotel has never been much of a factor in his center's success in its 20 years of operation.
He said he is eagerly anticipating the takeover by Club Resorts because he had heard the company tries to develop relationships with other community groups.
Pianist Paul Nitsch, now in his 13th year at Garth Newel, said The Homestead occasionally put up banners about the center's programs and announced them on the in-hotel television, but there was no consistency because management changed so much.
Management changes always ripple through a business, Ingalls says.
The most recent change was the mutually agreed upon resignation of Dennis Mills, who had been general manager for 15 months.
One of the things Mills did was remove Albert Schnarwyler as executive chef and bring in another chef. Schnarwyler had been at The Homestead more than 30 years. He co-authored the lavish "Dining at The Homestead" cookbook that the resort published in 1989 and still displays in its dining room.
Some employees say the way Schnarwyler was treated is one of the things they are unhappy about. They also fear that Mills is merely on leave until after the union vote.
Ingalls says that rumor isn't true. "There is no intention on our part or Club Resorts for him to have a future here," Ingalls says.
However, Ingalls says Schnarwyler might have a future role at The Homestead.
Schnarwyler wouldn't comment on that. He says he has been asked to join the faculty at Johnson-Wales University in Providence, R.I., and will retain his home in Bath County.
He says his leaving was related to the management team's having different ideas about the direction of the food service. One thing the new chef did was begin serving plates of food rather than passing the rolls and vegetables so guests could help themselves, which had been the style at The Homestead.
"It didn't go over well with longtime guests," Schnarwyler says.
Ingalls says a lot of the changes were necessary, but they could have been carried out better and explained more fully to the staff.
Because of the close relationship of the resort to the community, he says, employees "have a proprietary feeling, and to feel not included in a plan is a bit of an insult. That's where we failed a bit this year."
It's not only employees who have a stake in the resort.
Katy Wood, who manages the Bacova Guild home accessory store in downtown, said her business is directly related to The Homestead.
"If they're not busy, we're not busy," she said.
Beaver Shriver said his sporting goods store, the Outpost, is popular with the local residents, but it also needs the resort's guests.
The stock in the Outpost reflects a cosmopolitan clientele. Among the brochures on display are those for trout fishing in Argentina and bonefishing off Christmas Island near Java.
The Outpost is in Cottage Row, a complex of shops owned by The Homestead. Shriver also runs the Bear Paw bookstore inside The Homestead.
He says the pending sale "is a very positive thing."
"It's always good to get a shot in the arm," Shriver says. "I'm feeling very confident about the whole thing. I'm sad about the Ingallses."
\ The terms of the sale agreement between The Homestead owners and Club Resorts say the new owner will have a minority interest at first but will then buy out the Virginia Hot Springs company.
Dan Ingalls says that if he has a role with the new owner, it will only be one of representing the resort's founders. He says there is sadness about losing the family affiliation with the resort, but that will be offset if he can assure the place's survival.
Ingalls says the resort needs a network for getting business like the Greenbrier resort, in nearby White Sulphur Springs, W.Va., has as a subsidiary of CSX Corp.
Club Corp., with its subsidiary Club Resorts, has 400,000 club members on its mailing list "and just a quick mention in its newsletter generates business."
Ingalls says he wishes The Homestead had flourished under his leadership. He says it did improve.
When he returned to the resort, Ingalls says, he decided to concentrate on what had been popular aspects of the resort during his grandfather's time. He brought back the shooting sports, including skeet. Revenue from the sports have doubled and tripled since they returned, he says.
"We had Norman Schwarzkopf here last fall shooting," Ingalls says. "That's not bad for image."
Ingalls also brought back the Bath County Horse Show, which had been discontinued in the late 1960s.
Just to get The Homestead's name before the public, he participates in the 100-Mile Trail Ride, each year riding a different Homestead horse. He spends two months before the ride conditioning himself and the horse for it.
Ingalls says the resort doesn't need expanding and its physical structure doesn't need immediate attention. It needs business - and that's what Club Resorts can do for it. Ingalls also thinks the Texas company can re-establish The Homestead's ties with the community.
"We could be doing more in developing a labor pool by working with the schools and even Dabney Lancaster Community College. And not just developing them for working here. Living next to The Homestead is like living next to a ladder to a real career." Club Corp. "is a pathway to 200 other places," he says.
Club Corp. rescued Pinehurst Resort in Pinehurst, N.C., in the mid-1980s. Last week, a "due diligence" team from Pinehurst was at The Homestead looking at its facilities and interviewing employees about the operation.
The Homestead's owners and Club Resorts are to agree on a business plan by the first week of August. If the union has not been accepted, the plan will be voted on by The Homestead board later that month, and the new owner could be in control by September, Ingalls says.
"I can see a secure future for everybody here and that makes me feel very good," Ingalls says. "We can't miss this one."
Keywords:
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by CNB