Bankruptcy Filing by Posh Hotel Rocks City’s Tourism Plans : Oxnard: The Mandalay Beach will continue operating, says a manager. The town wants to become an L.A. getaway.
Oxnard’s plan to become a regional tourist attraction received a blow when the Mandalay Beach Resort and Hotel filed for federal protection from its creditors, city officials said Friday.
“It’s a psychological blow to the city,” Councilman Manuel Lopez said. “The Mandalay Beach is the Cadillac of hotels in Ventura County.”
Hotel representatives announced this week that the seaside resort had filed for Chapter 11 bankruptcy May 15 to renegotiate more than $21 million in debts.
The hotel will continue operating, hotel manager Robert Dupree said.
On May 14, Dupree said the hotel was doing fine. However, a day later hotel officials filed for bankruptcy. Dupree said Friday that he is still very optimistic about the future of the 250-room hotel near the Channel Islands Harbor.
“From an operational point of view, it’s going great,” Dupree said. “We had a terrific Memorial Day weekend.”
The hotel averages 62% occupancy, but more than 90% of the rooms were taken during the holiday weekend, he said.
“The only thing that’s happened is that we’ve restructured our debt,” he said.
The hotel has failed to pay most of its property taxes for four years, and two loans totaling $20.8 million are due in June, hotel officials acknowledged.
Scott Clarkson of Los Angeles, the hotel’s bankruptcy attorney, said the resort sought protection under Chapter 11 because it was having trouble refinancing the debt accrued during construction and start-up of the $36-million hotel.
“The hotel is not at risk and the people who use it are not at risk. The hotel’s services will continue to be standard, and might even get better” during the bankruptcy, he said.
In 1990, the Mandalay Beach came to an agreement with the county to spread the payments for the overdue taxes over five years. But in April, the hotel defaulted on the payments, said Cynthia Simmons, supervisor of the Ventura County tax collector’s office. The hotel owes the county more than $800,000 in taxes, interest and penalties.
In penalties alone, the debt to the county increases by about $11,000 every month, Simmons said.
However, the hotel paid the city more than $500,000 in taxes in 1990. That year, the hotel’s revenues totaled more than $7 million, surpassing the previous year’s income by more than $1 million, Dupree said.
The city charges hotels an 8% bed tax on every booking.
“Since this is our most expensive hotel, it is a major contributor to our tax base,” said Millie Norman, director of the Oxnard Visitors and Conventions Bureau.
Since its opening five years ago, the Mandalay Beach has anchored the city’s tourism industry, Norman said.
“It’s one of our main image-builders,” she said. “It competes with some of the major resorts in Santa Barbara, Palm Beach and Long Beach.”
Oceanfront rooms at the Spanish Renaissance-style hotel are $250 a night, the highest-priced in Oxnard. And the Mandalay Beach is the only hotel in the city that sits on the beach, Norman said.
In recent years, tourism officials have tried to establish Oxnard as a weekend getaway destination for people from Los Angeles, Norman said. The Mandalay Beach plays a mayor role in that strategy, she said.
“Naturally, their success is very vital to the success of the city,” Norman said. “This is our most elegant hotel.”
However, officials criticized the hotel in recent weeks because it owed the city $180,000 for landscaping and beach maintenance.
Oxnard made up the deficit by borrowing from reserve funds and charging the hotel’s neighbors in the Mandalay Colony homes an extra $5 each last year.
The city asked the residents to pay another $5 per house this year to underwrite the hotel’s landscaping and maintenance costs, but many responded with protests.
At a public meeting Tuesday attended by about 100 colony residents, homeowners association President James G. Pollard told the City Council that colony residents could not agree to such a fee. The proposal was tabled, and city officials are continuing to negotiate with homeowners.
City Councilman Lopez said the city has tried to help the hotel by booking city luncheons and business meetings there, but cannot afford to do more.
“We have our own financial problems. We can’t afford to subsidize private businesses,” he said. “But we try to help all of the city’s hotels by channeling some business their way. On our most posh occasions, we go to Mandalay Beach.”
This year the city held a dinner dance at the hotel for 100 journalists and publicists to promote the annual Strawberry Festival.
The city’s own financial difficulties have not been a help to the hotel, Lopez acknowledged. In 1990, the City Council slashed the tourism bureau’s budget from $400,000 to $60,000.
Funding for the bureau was reduced even further this year and will run out by the end of July unless private businesses agree to underwrite it, Norman said.
