Monday, June 12, 2006

Is Lajitas Resort in Trouble?

The Lajitas Resort in deep West Texas - site of The Ambush golf course that features an extra hole whose tee shot is across the Rio Grande into Mexico - is the subject of a lengthy article in the San Antonio Express-News today.

While officials at the ultra-upscale resort - the brainchild of Austin's very wealthy Steve Smith - say things are going just fine, the report uncovered signs of possible financial trouble. For example, the resort has been late with tax payments. Room rates have never been above 50-percent occupancy and are down 10-percent in 2006.

The article reports:

Recent signs, however, suggest Lajitas is still struggling. While the resort claims 100 members and 50 corporate clients, it has never broken even and annual room occupancy hovers around 50 percent.

Figures filed with the state comptroller's office show that hotel room receipts for the past four quarters, totaling about $1.8 million, are down 10 percent from a year before.

And although real estate was supposed to drive the project, lot sales have been slow
and only five private homes have been built on the surrounding 25,000 acres of desert owned by Smith.

Various expensive resort projects have been on hold, including a 35,000-square-foot golf clubhouse and spa complex, and a controversial highway bypass.

Smith, who made his fortune with Excel Communications, declined to be interviewed.

Lately, even he has shown signs of financial strain. Since 2005, Smith has twice been sued over large sums of money allegedly owed. His lawyers are wrangling with the Internal Revenue Service over $140 million in contested tax shelters.

And in Brewster County, for a second year in a row, the resort's local tax bill was late. Finally last week, with the collection lawyers about to be turned loose, the
resort got some good financial news and the $295,000 tax bill was paid.

We've written before about The Ambush at Lajitas. The course designers - the Austin-based duo of Randy Russell and Roy Bechtol - wanted to build a desert-style course. After all, the course is in the desert. But Smith wanted a parkland-style course, a shimmering green oasis.

So a parkland course is what the designers created. But last year, The Ambush's total area of greenery was cut back with a re-design that brought more elements of a desert course into play.

In the Express-News article, there is this nugget:

... Smith has almost completely remade the place, modernizing the trading post, adding a 7,500-foot jet runway and a huge equestrian center and creating a golf course that once consumed about a million gallons of water a day.

In South Brewster County, long an outpost of eccentricity and self-reliance where the per capita income is just over $15,000 and some people still catch rainwater, Smith's extravagance has offended some locals.

Emphasis added above. See the full article. It's an interesting read, and is much more balanced than the excerpts we're posted indicate. I came away from the article thinking that the resort is not on the verge of bankruptcy, but is certainly not doing as well as its creators had hoped.

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