SIOUX FALLS, SD— Putting heads in beds is not easy these days, according to David Sweet, president/CEO of Regency Hotel Management. “We’re working harder than ever, especially on the sales side. The corporate end of the business has been the hardest hit, so we’re doing more negotiating and going out to get deals done ahead of time,” said Sweet, whose firm is a wholly owned subsidiary of Ramkota Companies. “The biggest change is in the cities, that’s where business is down the most, places like Dallas, Atlanta, St. Louis and Omaha,” Sweet said. “So we’re talking to companies— McDonalds for instance— to get the business.” Specializing in full-service properties, Regency owns and manages hotels in the nation’s midsection and the Southeast. Sweet also oversees Kelly Inns, the limited-service segment of Ramkota, which has a portfolio in the upper Midwest. Only 10 of the 58 properties in the Regency and Kelly portfolios are third-party management contracts. “We have an ownership stake in most of the properties,” Sweet noted. Although corporate business is currently in the doldrums, there are bright spots for Regency and Kelly Inns. As war with Iraq looms on the horizon, there has been stepped-up military activity in various markets where the Ramkota affiliates operate, according to Sweet. “We’ve negotiated with the military and do a lot with the National Guard, housing them before they leave” on assignments, he said. Properties in Rapid City, SD and Kansas City, MO have been serving the military, he said. Additionally, leisure business has been on the upswing, particularly at drive-to destinations near national parks, lakes and golf courses, according to Sweet. “Americans have not been traveling out of the country to Europe and other places like they did in the past. As a result, we’re seeing an increase in business near Yellowstone Park and in places like Billings, MT [where Kelly Inns has properties].” Ramkota is building and will own a 200-room resort in the Black Hills of South Dakota, Sweet said. Located in Deadwood, the clientele at the resort will be “heavily leisure,” he said, “but we will have meeting space and expect to also attract convention groups.” He anticipates breaking ground on the property this year or in 2004. Sweet described his firm’s growth strategy as “very, very cautious,” noting, “we’re actually selling a few things, older properties and hotels in markets that might be challenged” in the future. The difficult times began some time before 9/11, he said, adding that 1999 and 2000 “were not the norm” for the hotel industry and many other businesses. “The reality was that a fake economic bubble burst after the Clinton administration ended and the technology industry started to come down. There were cutbacks and layoffs in many cities at the end of 2000; the business climate was already going south at the start of 2001,” Sweet said. “There were those who said 2001 was the worst we’ve had in years, but then 2002 was even worse and some predict 2003 will be worse than that… we’re seeing a ton of lender business and we’re doing a lot of receiver work. And I think you’re going to see more properties coming on to the market for sale.” Despite the uncertainty, Sweet is looking to expand his company’s portfolio although he will be conservative. While both one-offs and group purchases are being considered for growth, “a one-off is safer these days, you can get your hands around it better,” he said. “We’re now looking at four or five different deals that are one-offs that we would be buying,” Sweet continued. There are also four or five management contracts in the works with lenders, he noted. As for new-construction projects, Sweet said that along with the planned Black Hills resort, “we’re looking at additions. For example, we’re building an indoor water park at the Arrowwood Resort in Alexandria, MN in order to be more competitive.” Care is also being taken to maintain existing properties, he
