THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Sunday, December 10, 1995 TAG: 9512090446
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY STEPHANIE STOUGHTON, STAFF WRITER
DATELINE: VIRGINIA BEACH LENGTH: Long : 227 lines
At The Founders Inn & Conference Center, the antiques are polished to a sheen, evergreens are trimmed to the needle and beds are turned to perfection.
Few people would deny that the Christian Broadcasting Network, Pat Robertson's teleministry, owns one of the stateliest and courtliest hotels in South Hampton Roads. But CBN wants more: a bigger share of the nation's conferences, a steady flow of visitors and a business that will evolve into a money maker.
Last month, Virginia Beach-based CBN moved closer to those goals by hiring an aggressive management company known to quickly turn around lagging properties. The immediate hope is to pay off the hotel's debts. Then, CBN officials want to further expand the facility.
The management company, Interstate Hotels Corp., is no CBN. Espousing religion and family values is not Interstate's mission. Instead, the Pittsburgh-based company will focus on The Founders Inn's bottom line.
``In a real world, you have to pay for what you provide,'' said Michael Little, CBN's president and chief operating officer. ``The issue is service and not religion.''
The move will allow CBN to devote time and energy to its outreach programs rather than hotel management, Little said.
The Founders Inn is South Hampton Roads' only four-diamond hotel, an elite rating by the American Automobile Association. Until Interstate took over, the inn also had the distinction of being totally alcohol free.
The 249-room hotel, part of the CBN complex off Indian River Road, is known for its upscale restaurant, furnishings, carefully groomed landscape and service. It cost an initial $36 million to create the brick, Georgian complex with fine marble and wooden floors.
``They're very good,'' said Christel Edwards, executive secretary for the Sales & Marketing Executives of Tidewater, which has held meetings at the conference center. ``The facility is beautiful, and the service is excellent. It makes a big deal that everything is done right and on time.''
In the parlor and halls, there are antiques like Shaker cabinets and paintings like Claude Monet's ``The Wild Poppies.''
For leisure, guests can shop at a lady's boutique, a Christian gift shop or a snack shop called the Muffin Pan. For exercise, there are a fitness center and swimming pools. On most nights, visitors also can wander into the theater to watch plays like ``It's a Wonderful Life.''
But perhaps the biggest local draw is the Swan Terrace, known for Sunday brunches that feature big buffets and soft tunes from a pianist. The upscale restaurant is named after the black swans that swim in the property's ponds and waddle across the hotel's 18 acres.
``A lot of love and care was put into the design and construction of this place,'' said Robert Mercer, the new manager of the hotel and conference center. ``It was built to last.''
Ever so cautious, Mercer adds, the hotel designates a sharp-eyed staffer to putter around in a golf cart, wiping up after the swans lest a guest slip on their droppings.
Room keys feature some of the latest features in security. They are programmed for use, meaning it's easier for the hotel's management to track who's entering a specific room. The combination is changed each time a guest checks out of the hotel.
The typical room features ``only the best linens,'' upgraded hotel furniture and telephones in the bedrooms and in the bathrooms, Mercer said. The elite suites upstairs are even more posh, offering the best furnishings, balconies and dining areas.
Despite its elegant offerings, it's no revelation that The Founders Inn has lost money. While CBN officials declined to release full figures for the hotel and conference center, the fledgling business is still coping with hefty start-up costs.
``It's a business that has lost money,'' an industry source said. ``I don't think that's a big secret. It's normal for a new business like that.''
In the fiscal year that ran from April 1, 1993, to March 31, 1994, the hotel and conference center brought in $2.5 million in revenues from the secular community plus $4.5 million in sales from the religious community, according to federal tax documents. The latter is exempt from federal and state income taxes. But meals, lodging and sales taxes are paid on all revenues, including religious revenues.
But these figures don't show the entire picture. CBN itself holds conferences and meetings at The Founders Inn, and those intra-company figures are not specifically mentioned in the IRS Form 990 tax form, CBN officials said.
Even with revenues from CBN's meetings, The Founders Inn listed $14.2 million in operating expenses, interest and depreciation during fiscal 1993. The previous year, it reported $12.1 million in expenses, and in fiscal 1991, $11.3 million.
Once again, these figures might not represent all of the money CBN has put into its hotel and conference center.
CBN does not have to release financial information other than the Form 990, which is an IRS tax return for organizations exempt from income tax.
CBN might have pumped a lot of money into The Founders Inn, but that doesn't guarantee profits. The organization is turning to Interstate because it thinks the Pennsylvania management company can do a better job.
Interstate is known for taking on lagging hotel and resort properties. In the past two years, it has tripled its management portfolio to about 150 properties.
``It's really a mixed bag,'' said W. Thomas Parrington Jr., Interstate's president and chief operating officer. ``There are really trouble properties, undermanaged properties and there are some that were already pretty successful and wanted to go up a notch.''
The Founders Inn is somewhere between ``undermanaged'' and pretty successful but aspiring, Parrington said.
``I think the property is beautiful, and it has no physical problems,'' he said. ``But I think it's a property in a market that has been down and is now making a comeback. . . . I think it needs a much more aggressive and broad-reaching marketing effort.''
The Founders Inn has never been considered a threat by those in the local hospitality industry. Other hotels in the region have the edge because of their sheer size and ties to national chains.
In marketing, chain hotels have frequent-traveler packages, promotions for their national toll-free numbers and buying clout. Companies like Host Marriott Corp. know how much to pay for a bottle of ketchup and how much to spend on linens.
Companies like CBN don't.
With 249 rooms, The Founders Inn also can't house many of the national groups that want to hold large conventions. Those organizations are more likely to turn to places like the 405-room Norfolk Waterside Marriott and Convention Center or the 442-room Omni Waterside Hotel, also in downtown Norfolk.
Under Interstate's management, The Founders Inn should be able to draw more small- and medium-sized conference business from outside the region. Those in the hospitality industry, however, don't anticipate any losses from The Founders Inn's strengthening.
``We won't lose a lot of business,'' said Dan Marone, manager of the Norfolk Waterside Marriott and Convention Center. ``It won't create a big shift in current business; it will draw more business from outside the region. That's where the money is to be made.''
There may be some shifts if The Founders Inn expands. If it becomes a resounding success, profits would be used to pay off the mortgage and other debts, and then possibly to expand the hotel by 250 rooms, CBN officials said.
But any expansion is tentative and likely years down the road, they added.
In the one month Interstate has operated at The Founders Inn, it has made its presence known. First, it tweaked CBN's alcohol policy. Then, it clearly stated a hiring policy forbidding discrimination - a reference to controversy over the hotel's hiring practices several years ago. Then, Interstate began to look for places to trim.
Interstate felt that The Founders Inn would be at a disadvantage if it couldn't serve alcohol to people attending private meetings and conferences. The management company would have liked to have alcohol offered in the restaurant. But it felt that conferences were more of a priority.
CBN agreed, but it made one thing clear: There were to be no beer guzzlers in any other areas of the hotel.
``There hasn't been a whole lot of changes as far as standards go,'' said Florence Thacker, a waitress at the hotel's restaurant. ``The major changes are really business changes, like watching payroll. Interstate is more controlled, more on top of things.''
CBN and Interstate also spelled out a nondiscriminatory hiring policy for the hotel and conference center. In 1991, when The Founders Inn opened, a CBN official acknowledged that the company was hiring only Christians at the hotel. A CBN spokesman said the company's hiring practices are no longer an issue and that the hotel has not discriminated against non-Christians over the past several years.
With the slow season approaching, employees may find their hours cut, Parrington said. As the business grows, however, staff will likely be added, he said.
So, if Interstate can make The Founders Inn a hit, when does Robertson's hotel go from a religious venture to a business one? Or can it do both?
The Founders Inn is described as a place for religion, started in part with religious money. But the visionaries behind it always intended the hotel to evolve into a money maker.
So what's the problem?
In the past, critics have attacked CBN's use of tax-exempt donor money to start money-making ventures that aren't entirely devoted to religion. Critics also have said the tax-exempt status gives CBN an unfair competitive advantage in starting businesses that might later turn profits.
CBN doesn't see any problem. First of all, the law allows it. Secondly, CBN raised donor funds specifically for The Founders Inn.
``Nobody could have given money to the ministry and have it mistakenly gone to The Founders Inn,'' spokesman Gene Kapp said. ``In this case, donors and supporters were directly approached for this specific project: The Founders Inn.''
Officials say The Founders Inn continues to fulfill its mission, which is to provide a religious experience for those who want it. In its federal tax documents, CBN describes the place as ``a conference center where people can come to find God's will for their lives.''
But it adds that while The Founders Inn targets the Christian community, non-Christians can enjoy the experience, too.
``The Founders Inn and Conference Center focuses its attention on the Christian community, offering a place to be restored, edified and trained,'' CBN writes. ``Part of this training involves the hosting of conferences, where Christians and non-Christians alike can come to a deeper understanding of God.''
Furthermore, CBN said it doesn't take tax breaks on the secular community's revenues.
If there are religious aspects to The Founders Inn, Interstate wants to distance itself from them.
``I think we're going to operate it more as an Interstate property and try to stay away from the religious issues,'' Parrington said.
But that may be difficult. The hotel's staff is mostly Christian, many visitors are Christian and the owner is a Christian. Even Parrington acknowledges the hotel, which is Interstate's first religious-affiliated property, has ``unique needs.''
At least one employee doesn't want to see that change.
``I've been a server all my life,'' said Thacker, who works in the hotel's restaurant. ``It has been really great to work in a Christian environment. . .
On the other hand, there are others who don't like the religious aspect of The Founders Inn. In the past, the CBN link, especially former hiring practices at The Founders Inn, has turned off some potential conference visitors.
``We did run into one problem with some of our members considering it too religious,'' said Christel Edwards of the Sales & Marketing Executives of Tidewater. ``Some flatly refused to attend at all. . . . After we realized there were so many complaints, we tried to use different hotels.''
For Edwards, a nice hotel is a nice hotel.
``But everyone's entitled to an opinion, and we have to treat them equally.'' ILLUSTRATION: RICHARD L. DUNSTON/The Virginian-Pilot\Color photos
The Founders Inn is the only four-diamond hotel in South Hampton
Roads.
The hotel's Swan Terrace is known for Sunday brunches that feature
big buffets and soft tunes from a pianist.
The 249-room hotel is known for its furnishings, carefully groomed
landscape and service.
The Founders Inn & Conference Center is off Indian River Road in
Virginia Beach.
by CNB