Owners hope big gamble on Greenbrier pays off
Thursday, May 24, 2012
WHITE SULPHUR SPRINGS, W.Va. -- It’s 11 p.m. in The Greenbrier’s Casino Club, and waitresses dressed in evening gowns are passing out complimentary flutes of champagne to each guest. The uber-elegant, 103,000-square-foot casino suddenly is flooded with orchestral music – an original arrangement called “The Greenbrier Waltz,” we’re told – as two couples dance from the marble staircase to the faux springhouse in the center of the casino.
Some gamblers stop to watch and take pictures, while others seem oblivious to the dancers. An attractive young blonde at the craps table, about 20 feet from the springhouse, screams “Six! Six!” while at a nearby blackjack table a man yells, “Boom!” every few seconds.
Some, though, savor the charm of the moment. At the bar in the Twelve Oaks lounge just off the casino floor, John Love of Charlottesville, Va., has been nursing a gin and tonic and waiting for the toast. “I really enjoyed that,” Love says, almost giddy, after the dancers have departed. Love grew up near here, in the coal country of southern West Virginia, and tells everyone at the bar that as a young man he sometimes circled the ornate driveway at The Greenbrier just to ogle the expensive cars. But he never stayed at the historic resort until this month, for his 50th wedding anniversary.
The addition of the underground casino is only the most prominent of the changes to have taken place since Jim Justice, the local agriculture and coal magnate, bought The Greenbrier three years ago.
If you want to understand why Jeff Kmiec, The Greenbrier’s president, refers to Justice as “the grand poobah of change,” consider the resort’s laundry list of multimillion-dollar initiatives.
At press time, Justice was preparing to break ground on the 123,000-square-foot Greenbrier Medical Institute that will be anchored by top specialists such as Dr. James Andrews – “Jimmy” to Justice, a repeat patient. A major course-renovation project spearheaded by Jack Nicklaus and pro emeritus Tom Watson has been mapped out, and work could begin this fall. The Greenbrier Presidential Express, a tricked-out train that will ferry guests here from the lucrative Washington market, is awaiting regulatory approval and could be ready to roll by fall. The resort also is subsidizing some direct flights into Greenbrier Valley Airport to improve access. And “America’s Resort” is preparing to host the PGA Tour on the week of America’s Birthday, the 3-year-old Greenbrier Classic having secured the prime dates of July 5-8.
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Since his childhood in nearby Beckley, Justice, like Love, has had an idealized vision of The Greenbrier, long a favorite retreat of presidents, dignitaries and celebrities. That vision, however, didn’t match the reality Justice faced when he purchased the resort out of bankruptcy court on May 7, 2009. The Greenbrier was 231 years old, and felt every bit of it.
Justice sometimes says the luxurious resort he acquired seemed more like “an elegant retirement home.”
The business had been hemorrhaging red ink for years under previous owner CSX Corp., and groups and longtime guests were deserting the resort because of its union problems.
Justice said that in the first 38 weeks he owned The Greenbrier, “We lost $1 million a week. That’ll get your attention, I promise you that.”
In that situation, a business has three options: a) grow revenues; b) cut costs; or c) fold. Throughout his business career, Justice always has chosen Option A.
Justice chose to “rebirth” The Greenbrier by pouring his personal fortune, which Forbes this year pegged at $1.2 billion, into recapturing the resort’s past glory. Consider the Casino Club. It illustrates his most fundamental
business trait: The 6-foot-7-inch Justice is almost pathologically incapable of thinking small. Every good, little idea quickly mushrooms into a big idea.
In building the casino, Justice chose the most expensive option: putting it beneath the hotel’s front entrance, which made it easily accessible for guests but out of sight for those who don’t want to partake. (Justice acknowledges spending $100 million on the casino, though some believe that figure is low.) Guests in the reception area near the casino staircase wouldn’t know what waits below if not for the “Casino Club” sign. “You have to seek the casino,” said Todd Fishon, vice president for casino operations.
From the outset, Fishon said, the casino was based on “our perception of Monte Carlo” as seen in James Bond movies – men in tuxedos, women in evening gowns. (Ironically, Fishon visited Monte Carlo after the casino was built and came away disappointed by poor service and relaxed dress codes. “It’s probably better that we built it before we went there,” he said.) The lavish grand opening of the Casino Club on July 2, 2010 – just 10 months after construction began – made the Academy Awards look like a frat party. Even now, men are turned away in the evenings if they arrive sans sport coat.
Similarly, the Greenbrier Medical Institute initially was conceived as a place where executives and the well-heeled could get physicals and convalesce after surgeries. It has grown exponentially into a $250 million project that will involve Andrews and other prominent specialists, focusing on everything from sports performance to advanced medical research.
Justice also wasn’t satisfied merely to bring a PGA Tour event to the resort’s Old White TPC. He created a concert series for tournament badge holders. This year’s acts are Toby Keith, Lionel Ritchie, Rod Stewart, The Fray and Bon Jovi.
This could be just a warm-up act. Justice wants to bring the 2017 Presidents Cup to The Greenbrier.
To help that cause, he wants Nicklaus and Watson to redo the Greenbrier and Meadows courses, which will be renamed in their honor. (The renovations also would free up more real estate on the valley floor, near the resort amenities.)
Justice understands the perception all of this creates: A rich guy, more money than he knows what to do with, using the resort as his personal plaything. That ignores his hypercompetitive nature. Justice, a longtime coach who led his Greenbrier East High School girls basketball team to the state championship this year, tends to couch his business remarks in the jargon of sports.
“If you’re not profitable, then your peers look at you and say, ‘He poured a bunch of money into it and he did a lot of nice things for the community. But as far as running a business, he really just failed,’ ” Justice said. “I don’t want that to happen. I want to win the game.”
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Justice’s whole strategy can be summed up in one word: energy.
The Greenbrier had lost its mojo.
“It had just ground to a halt,” he said.
How do you fix that? Justice ticks off all of the amenities that bring in more customers and keep them here longer.
“You grow your way out of it,” Kmiec said.
To help accomplish that, the resort has tried to improve access.
The Greenbrier Express is part of that strategy. The resort also has helped subsidize direct flights to the local airport from Atlanta and New York. Those flights brought in 15,620 passengers last year, up 38 percent over 2010, said Kmiec, citing federal statistics. The New York shuttle no longer exists.
The Greenbrier also got aggressive on pricing after Justice took over.
“We most certainly did the first two years,” Kmiec said. “Not enough people knew that The Greenbrier didn’t close. Not enough people knew that there was a new owner. So we were very, very aggressive rate-wise and program-wise and package-wise to get the word back out that The Greenbrier is better than ever.”
As occupancy rises, Kmiec said room rates are edging back up. But with nine unions ensconced at the resort, Justice readily concedes, “We don’t try to be the cheapest, and we don’t think we can compete with other resorts on cost.”
Justice has never wavered from the grand vision he had of The Greenbrier as a child, and it comes with a cost.
Indeed, a party of four can spend a mortgage payment on dinner at the posh Prime 44 West restaurant. But it might seem like a bargain if NBA legend Jerry West, the restaurant’s namesake, stops by your table, as he sometimes does, to chat.
Similarly, Burt Baine, the golf club’s general manager, said the plan is to push prices at the Old White TPC, now $325, “up into the stratosphere. We want to position the Old White comparable to Pinehurst No. 2, Pebble Beach, that type of property.”
The hard numbers suggest Justice’s plans are starting to work. Justice said The Greenbrier was in the black through October before settling for a $1.7 million loss in 2011. In the non-peak, first four months of 2012, he said the resort lost about $7 million, down from a $13 million loss during that period a year earlier. Recent seasonal layoffs dropped payroll to 1,650 employees, but Justice expects that to return to 1,850 for the peak season. Within three years, he’s hopeful that the medical institute, train and other initiatives will add another 1,000 jobs.
“I want to be prudent and I want to be smart, but I put myself in the game,” Justice said. “I’m in the game. If this place fails, it’s not like, ‘Oh, I’ve got so much money that it doesn’t really matter.’ . . . It drives me crazy when someone has $400 million and they invest $4 million and they say they’re risking everything. Bullsnot! Who are you kidding?
“But Jimmy’s in the game. And that’s the way I want it to be.”