Beach Bummed: Big Bills Are Sinking Hollywood's Small Hotels
But the small Hollywood hotels were doing bad even when the economy was still good. They survived the hurricanes, only to see insurance costs double and triple. Property values went up, and their property taxes followed. Since a small hotel has only so many rooms, it's ill-equipped to generate the money it needs to offset those costs.
And now that the recession has settled in, Hollywood's independent hotels are competing for the dollars of a small horde of ruthless bargain-hunters. "People are more rate-sensitive than ever before," says Dori Lynn Neuwirth, who owns the Atlantic Sands on Hayes Street. "A lot of them want to spend less than $100 a night. That seems a bit unrealistic, but maybe they can find it, because there are some (hotel operators) who need cash in hand and can offer lower rates."
Hotel operators like Eileen Miller, who runs the Swan and the Mermaid, about seven blocks south of the Atlantic Sands. I asked Miller how she's weathering this bleak economic climate. She gave a dry laugh and said, "I'm looking to see what country I should move to." She's serious -- currently, she's leaning toward New Zealand. But first she's got to sell her hotels, a tough proposition, especially considering the costs of insurance and property taxes. After she makes those payments, is there any profit left? "Fuhgettaboutit," says Miller in her New York accent.
As if there aren't enough obstacles, Miller says that the city has added another: A fresh batch of historical designations that aim to save the beach's small hotel character at a time when the small hotel is no longer feasible financially. (More after the jump.)
By designating a property as historic -- usually for an architecture style distinctive to a period -- the city protects it against demolition. Good for preservationists, but it's the bane of developers. And those who would sell to developers, such as struggling hotel owners like Miller. "To make a project work (a developer) has to build a certain number of habitable units," she explains. That means they need to combine several small parcels into one (i.e. assemble), and that's harder -- if not impossible -- when a protected structure lies in the middle. But all Miller cares about is the effect: "The historical designations mean that even if the economy improved, the developers would go elsewhere."
In the meantime, Miller and other hotel owners have become less picky when it comes to accepting guests. "I had a Broward Sheriff's detective here a while ago, because of an altercation between guests," says Miller. "He asked me, 'Why would you rent to a low-life like that?' I said, 'Because we're so desperate to pay insurance and utilities -- we'll take anybody who breathes."
There's more drug-dealing, more prostitution, and more homeless camping out on undeveloped or foreclosed-upon properties, which makes the beach less desirable to tourists and developers. This is a tailspin.
If the city really wanted to ensure the long-term character of its beach Miller and Neuwirth would appreciate the city of Hollywood coupling its campaign of historic designations with a plan that made it easier for them to pay the overhead costs that are devouring their profits. Sounds like pie-in-the-sky, except the beach has its own Community Redevelopment Agency, which is flush from collecting the tax revenue from recently developed properties. That agency's management has been shaky. Currently, its under fire for allowing a huge property on Johnson Street -- purportedly the future home of the $80-million, 323-room Marriott Ocean Village -- to stagnate. Today the site is home to a hippo water slide, which sadly does not generate tax revenue.
Miller, who admits to having grown a bit cynical, in case you haven't noticed, has her own theory. "The CRA is supposed to be re-developing the beach, but if they move fast, they'll have to go to work someplace else. When they're finished they don't have jobs, so why would they want to finish?"