Investor group works to revive Delavan resort

Listen to this article

By TOM DAYKIN
Milwaukee Journal Sentinel

DELAVAN, Wis. (AP) — As summer officially arrived, Lake Lawn Resort was a buzz of activity.

It didn’t involve guests checking in, or wedding parties and corporate events filling the banquet rooms. Instead, it was work crews replacing a leaky window, repairing a fireplace chimney, patching a roof and performing other tasks to help reopen Lake Lawn, among the largest resorts in Walworth County, where tourism is a big part of the local economy.

“All the maintenance was deferred, so we’re playing catch-up pretty rapidly,” said local developer Jim Drescher, whose investors group bought the 258-acre property overlooking Delavan Lake in May. “We’re trying to get the big issues done before we open.”

Meanwhile, Lake Lawn’s 281 guest rooms and 32,000 square feet of meeting and banquet rooms remain closed. Lake Lawn shut down in December after falling into foreclosure under its previous owner.

Drescher hopes to have some of the guest rooms open soon. But he and resort manager Dave Sekeres don’t yet know for certain when the remaining rooms and facilities will be available.

“We only have one chance to get it right,” Drescher said. “Everyone’s working as hard as they can. … We knew this year wasn’t going to be a good year. Our goal is next year, and to get the place spruced up.”

Lake Lawn’s renewed success would benefit more than just Drescher and his partners. The resort has a major effect on the local economy.

At its summer peak, Lake Lawn typically has about 300 employees, making it Delavan’s third-largest employer. The resort’s room tax provides about 8 percent of the city’s annual budget. And Lake Lawn, where most of the business comes from northern Illinois, is a major driver of the estimated $414 million spent by travelers last year in Walworth County — Wisconsin’s No. 6 county for tourism spending, according to a state-commissioned study.

Visitors who check in for a week’s stay aren’t going to eat only at Lake Lawn, said City Administrator Denise Peironi.

“You’re going to go into town, and eat at other locations, and do other things in the community. It has a trickling effect.”

The resort has taken some major steps forward.

The first came the Friday of Memorial Day weekend, when the 18-hole golf course reopened — one week to the day after Drescher’s group, seven investors organized as Delavan Lake Lawn LLC, bought the resort for $9.5 million from a group of lenders led by Madison-based AnchorBank. Last year, Anchor foreclosed on the previous owners group, led by Mukwonago investor Patrick Nelson, after it defaulted on a bank loan, bringing a $34.4 million court judgment.

The golf course reopened only after days of mowing. The grass was about a foot tall when Drescher and his fellow investors took control of the property. Workers used outdoor vacuums to suck up the clippings.

Also, the marina reopened. Its 165 boat slips still need to be cleaned and stained, and lake weeds are to be removed once Lake Lawn obtains a state permit for the work.

Discounted rates for the golf course and marina have attracted customers, Drescher said. And Lake Lawn was set for another milestone with the opening of Lookout Bar and Eatery, the smaller of two restaurants at the resort.

With Lookout open, Lake Lawn will have about 40 employees, Sekeres said. The resort will have 200 employees once the banquet rooms and most of the guest rooms reopen later this summer.

The plan is to open 222 rooms in Lake Lawn’s main building that were remodeled by Nelson and his partners. Another 59 rooms in a separate building won’t be offered to guests until they’re updated, Drescher said.

But the remodeled rooms are in “great shape,” he said. The $40 million in renovations by Nelson’s group include updated décor, new bathroom fixtures and flat-screen TVs. All but 21 of the updated rooms were sold as condominiums, with the rooms available for hotel guests when not being used by their owners.

The rooms cannot be offered to guests until new access and management agreements are reached between Drescher’s group and the condo owners association.

Those negotiations are proceeding quickly, with an interim access agreement reached, said Drescher and Dale Thorpe, attorney for the association. Drescher’s group is now contacting individual condo owners to obtain additional agreements, and Drescher hopes to see some of the rooms made available soon.

Meanwhile, the work continues.

Stationary bicycles, treadmills and other equipment are lined up in a nearby corridor so new carpeting can be laid in the fitness room. The indoor pool has been cleaned and filled, but the outdoor pool holds only rain water while waiting for its lighting and safety fence to be replaced. In the larger of two separate kitchens, each piece of equipment is being cleaned by hand.

Along with the repairs and maintenance work, the lobby will be updated to make it more welcoming, Drescher said.

Drescher expects to spend $1.2 million on repairs. Those funds, along with the cash to buy Lake Lawn, were raised entirely by Drescher and his partners. The owners didn’t use a bank loan, so they have the advantage of not having to make regular debt payments.

Also, Sekeres and his staff are contacting Lake Lawn’s group customers to begin attracting company meetings, weddings and other events, which make up 60 percent of Lake Lawn’s revenue. Many longtime group customers were excited to hear of the plans to reopen, Sekeres said.

Weddings, in particular, have potential to provide more business, Drescher said.

In 2009, he said, Lake Lawn attracted just 31 weddings, compared with 70 weddings at Geneva National Golf Club in nearby Lake Geneva — even though Lake Lawn has nearly five times the amount of meeting space.

But getting groups to return to Lake Lawn might be difficult after being closed for several months.

“It’s not impossible,” said hotel consultant Greg Hanis.

But, it will be a struggle because meeting planners need assurance that Lake Lawn will be open when they book the hotel months in advance, said Hanis, who operates Hospitality Marketers Inc.

“It’s going to take some time,” Hanis said. “They’re going to have to prove the operation is sound.”

It’s all a new experience for Drescher, who has built houses and condos in Franklin, Greenfield and Lake Geneva.

“I never in my bucket list said I wanted to operate a resort,” said Drescher.

A founder of a food pantry that serves Walworth County, Drescher said he was motivated to form an investors group mainly to restore the jobs lost when AnchorBank closed Lake Lawn. He’s anxious to get the resort fully staffed, and hopes to see more business from the Milwaukee area.

“We just want to be the little brother of Grand Geneva,” Drescher said, referring to Marcus Corp.’s resort in Lake Geneva. “We can be very competitive, but we’ve got to get our game together.”

Information from: Milwaukee Journal Sentinel, http://www.jsonline.com