To condo or not to condo: Future of Holiday Inn Oceanfront now in limbo

October 13, 2007 

It's been a year since plans were unveiled to demolish Hilton Head Island's longest-operating hotel and its popular Tiki Hut bar and build condominiums. But now questions are arising about when, or if, the bulldozers will be coming.

Several employees of the Holiday Inn Oceanfront say their bosses have told them the hotel will be open at least through next summer and rumors have been swirling among the staff that the hotel might not get turned into condos after all.

General manager Gary Sims said the hotel has reservations on the books through 2009 and he told employees to expect to come back to work around Feb. 14, the day the beachfront bar will reopen next season. The bar closes for the season in early December.

Meanwhile, the hotel's owner and operator, Atlanta-based Lodgian Inc., has repeatedly refused to comment on its plans.

Representatives from several hotel chains have been visiting the property, a sign the company may be looking to sell the Holiday Inn as a hotel instead of redeveloping it, according to a long-time employee who asked that his name not be used because staff have been told not to talk to the media. If the property is sold as a hotel, it could mean the condominium plans will be dumped and the Holiday Inn and Tiki Hut will remain standing, he said.

"Now everyone is kind of breathing a sigh of relief a little bit," the employee said. "Instead of looking at days or weeks, we're hopefully looking at years."

Lodgian again this week refused to comment on its plans for the site. Sims said he didn't have much information he could share on when the 30-year-old hotel could be torn down to make way for a proposed five-story, 36-unit condo complex.

"Everything is exploratory at this point," Sims said. "All I can tell you is it's business as usual. ... It's one of the directions we're pursuing."

The conceptual design for the condominium building was approved in June by the town's Design Review Board, a procedural step required before a project can advance. But no demolition permit has been applied for yet, according to the town.

On the corporate level, Lodgian has had some difficulties recently. The company this summer announced it cut an unspecified number of jobs to save money. It has sold 22 hotels since November 2006 and CEO Ed Rohling told the Atlanta Business Chronicle in July it has an additional three hotels under contract and two more being actively marketed, but he did not specify which ones.

The company put itself up for sale this year and received several offers this summer, but none that the board of directors was interested in, according to news reports and statements issued by the company.

In a company conference call last March to discuss fourth-quarter 2006 earnings, Rohling talked about redeveloping the Holiday Inn as part of the company's strategy to reap a better profit from its properties.

"It's right on the beach and it's in a great location," Rohling said, according to a transcript of the call published through various business information services. "Unlike ... much of the Southeast coastal areas, the Hilton Head market is not saturated with upscale condos and this is one of the very few sites on the island that have beachfront development potential."

Meanwhile, Lori Cassidy, founder of the Save the Tiki Hut campaign, is focusing on a new effort. She and her supporters are proposing that the town incorporate a new Tiki Hut in its $2 million plans to redevelop the Coligny Beach Park. Building the bar would benefit local businesses and allow traditions like the volleyball tournaments the bar hosts to continue, while keeping an island landmark, supporters say.

The town, however, is not likely to jump on that idea. The plans for the park call for opening up the views to the beach, not creating more vertical construction. Plus, new town ordinances restrict the amount of beachfront development in the Coligny area, meaning a bar like the Tiki Hut could not be built today.

But for now, the legions of bathing suit-clad fans of the Tiki Hut have hope that they haven't sipped their last Frozen Alligator just yet.

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