Marc Resorts aims to upgrade product, service

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HONOLULU -- Marc Resorts Hawaii is on a mission to re-invent itself.

The hotel management firm has been known among travel agents and consumers "as a low-cost operator," according to chief executive officer Matt Delaney.

Delaney, who took over Marc just over a year ago, wants to change all that.

"Is this a turnaround job? Definitely," said Delaney. "We are improving the relationship with our hotel owners so we can upgrade the properties, and we want to improve our relationship with our travel partners and customers."

Delaney said until he took over and cleaned house -- he fired nearly an entire staff and hired 10 new people -- service levels at the company's hotels were all over the map, many of the properties were in a declining physical state and nightly rates were in the dumps.

Now rates are up 17% through July compared with the same period last year, the company added three new properties for a total of 20, renovations are in the works at three properties and the company is retraining its hotel staff to have a more service-oriented approach, according to Delaney.

But even though Marc is changing its ways, old perceptions linger.

"I know the Marc properties, but we don't sell them because they don't have a good reputation with our clients," said Mark Thomas, owner of the Travel Shop in Portland, Ore.

"Clients in the past would come back with complaints that the hotels were not well kept."

Upon hearing that Marc is turning over a new leaf, Thomas said the company "will have to pour a lot of money into its properties to update them, which will be a huge undertaking. And it's going to take a lot of effort to train all their employees."

But, according to Marc executives, the company is already moving in that direction.

New properties at Marc include the Emmalani Court in Princeville on Kauai, the Maui Ocean Front Inn in Kihei and the Diamond Head Beach Hotel in Kapiolani Park on Oahu.

The Diamond Head Beach Hotel, which Marc has managed since March, is getting a "top-to-bottom" renovation that should be finished by next spring.

A renovation at the Waikiki Marc should be completed in November, and the Island Colony-A Marc Suite in Waikiki is getting new elevators and a makeover to its lobby, also by next spring.

An oceanfront room at Marc Resorts' newest management acquisition, the Maui Ocean Front Inn in Kihei. Marc's latest addition in June, the Maui Ocean Front Inn, completed a $6 million renovation last March.

Vice president of sales and marketing Anthony Stone said the old Marc management was aiming for low rates and high occupancy, a strategy that did not allow the property owners enough downtime to upgrade the condominiums and hotels on a regular basis.

Now the company is aiming for better service, better product and higher rates, a strategy Marc executives said they hope will increase profits yet ease up on the wear and tear that comes with high occupancy levels.

"Given that two-thirds of our inventory is condominium units, our guests stay for a longer time," said Stone. "Just getting our staff to smile and say, 'aloha' to our guests makes a big difference. These are the kinds of fundamental changes we are making."

Delaney agrees the service level of the properties had to be changed drastically.

"In the past, when a guest would say, for example, 'Can I a have an extra blanket,' the answer would be 'We don't have one,' " said Delaney. "And that answer would vary from property to property.

"Our properties are nowhere near the Four Seasons quality, but there's no reason we can't have Four Seasons service," Delaney added.

In addition to getting service levels up and renovating properties, Marc will continue to add properties, probably two to three a year, he said.

"Our growth will be selective, we're venturing into the boutique area," said Delaney.

Marc Resorts has been in Hawaii since 1987, but was bought by Sunterra Corp. in 1997.

Sunterra, a company that operates time-share resorts around the world, filed for Chapter 11 bankruptcy protection in May 2000.

"The bankruptcy filing was one of the reasons I came out to manage Marc," said Delaney.

"The strategy was that Marc would be a profitable, stand-alone company if Sunterra had to go into Chapter 7 bankruptcy and liquidate. So whatever direction Sunterra goes in, Marc will be OK."

Delaney said Sunterra recently received some financing and should emerge from Chapter 11 by the end of the year.

Although Sunterra operates time-share products, only two of Marc's properties -- the Embassy Vacation Resort at Kaanapali and the Embassy Vacation Resort at Poipu Point on Maui -- have time-share product mixed with hotel product.

Delaney said in the past, those two time-share products affiliated with Marc were what kept Marc profitable.

Take those two properties out of the equation and the company's core hotel product was losing money.

"From December of last year through April of this year our core hotel product was very profitable, but because of the economy slowing down, it's affecting us, especially in Waikiki," said Delaney.

Stone, who is in charge of sales, wants travel agents like Mark Thomas to know the company is indeed on a turnaround mission.

"We want travel agents to know that only good things are going to happen from their recommendations to their clients," he said.

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