Interview: George Heaton on the Vero Beach Hotel & Club

Eight months ago, the barrier island’s first four star hotel, the Vero Beach Hotel & Club, went into full operation on Ocean Drive. We recently talked to Palm Beach’s George Heaton, who has developed a number of luxury properties all over Florida from Islamorada in the Keys to his newest resort on the Gulf of Mexico 30 minutes from Tallahasse, about Vero Beach.

Q. How did you decide to develop a hotel in Vero Beach?

Heaton: I had been coming here for 30 years, but only to drive up, have lunch at the Ocean Grill or the Driftwood – a Sunday afternoon drive. When we began looking for opportunities here, what we saw was there really weren’t any good accommodations in this wonderful little town. With its proximity to the rest of Florida, we thought if there was a great hotel, it would have a good opportunity of drawing people to this town.

Q. So you decided to buy the old Doubletree?

Heaton: We had a contract to buy it, and our original idea was to do a major retrofit on that property. Then before we closed, the (2004) storms came along and knocked it down. And so in the process of looking at what would we do with the property after the destruction of the storms, we found out that there was a plan that had been approved by our predecessor. The guys who owned the Doubletree had the property next door under contract, and had developed a site plan and gotten it approved by the city. So knowing that we were going to have to rebuild the old Doubletree, we went and acquired the adjacent property, the Aquarius, and got an extension for the site plan.

Q. What has surprised you about operating a luxury hotel in Vero Beach?

Heaton: The labor was very difficult for us to get. The customers have been very accepting of our product and very happy with it. But we found a shortage of good labor. So that has definitely been something we have worked on. I think we are in a better position to address that in the coming season.

Q. Many of your suites in the Vero Beach Hotel and Club are condos. How have sales been in this economy?

Heaton: We have 83 residences here altogether and we have sold, closed 51 of those residences. Our sales have slowed down substantially. People are just generally concerned, about themselves, about the market, and about where it is going to go.

Q. Are you seeing buyers from other countries?

Heaton: We have had quite a few Europeans, but I would say we have been surprised at the number of Floridians coming here to buy and to vacation or both. Especially from South Florida -- Dade, Broward, and Palm Beach counties. Eighty seven percent of our buyers have come from the area from Vero to Miami. So it has been a very attractive product both for local people and those people who are within a couple hours drive to purchase a second home that is maintenance free, and they can use it as much as they want, and then it is rented when they are not here and that offsets part of their carrying costs.

Q. How is hotel occupancy running?

Heaton: Our year to date occupancy is just a bit south of 60 per cent. We would expect that next year it would be around 70 percent. When we bought the property, it had been running at 80 percent occupancy. The old Doubletree at about a $189 rate had 80 percent occupancy. Over a period of three to four years, we would hope to get back up to the 80 percent occupancy.

Q. How do you see Gloria Estefan’s Costa d’Este changing the beachside hotel scene?

Heaton: We like her hotel a lot. It’s very different, but that’s good. She’s going to draw a lot of people to this town that we wouldn’t have the ability to draw, and it’s going to be a different type of person, and we are both going to benefit from that. Because she’s such a strong draw, there’s going to be people who come up here and maybe not like her property as much as ours, and they’ll come here and stay, and vice versa. But she’s going to expose Vero Beach to a lot more people than what it has been exposed to. That in itself is very positive for us.

Q. Do the two hotels have a different clientele?

Heaton: Yes, when I go over there, and see the clientele she’s got, it’s a younger clientele. And it seems to be a lot of Miami people, which would be reasonable although we have a lot of Miami people as well. But I think it is a different clientele.

Q. Your prices have been at the high end of the Vero Beach market. Does that make marketing more of a challenge?

A. Vero is really a bargain. Our competitors are from Palm Beach and Miami – the high end hotels that have been condoed are primarily in that market and Naples, Sarasota – so we compare ourselves to those projects, and I think our prices are very reasonable.

We find it is easy to sell if we can get people here to see the property. Making a presentation in Ft. Lauderdale or Miami is fine, but the real sale happens after they get here, and see the hotel, and see Vero, and stay here. We’ve found very few people who didn’t like it.