Callaway Gardens CEO pulls the trigger on cuts, believes nature resort will rebound financially as group business picks back up

tadams@ledger-enquirer.comJuly 9, 2013 

Less than a year after selling 7,000 of its 13,000 acres, Callaway Gardens is still working to lure more visitors to the nature-oriented attraction amid a U.S. economy that is slowly rebounding.

But Edward Callaway, the chairman and chief executive officer of the resort in Pine Mountain, Ga., conceded Tuesday the first six months of this year have been worse than expected. That has prompted belt-tightening that includes cutting some jobs and deciding to shutter the gardens for more than a week in early January.

“We spent $2.5 million on capital improvements this year. We thought we would grow our business by that much in the year. We’re not going to,” Callaway said. “We’re getting good growth in social (daily and weekend visitors), but not groups. So I have trimmed our expenditures to fit our budget.”

Much of that money was spent to upgrade the 274-room Mountain Creek Inn off U.S. Highway 27 and adjacent to Callaway Gardens. The CEO said the hotel and its furnishings had grown “old and tired,” thus turning off both individual and group travelers.

The renovation included 30 rooms last fall just as Callaway’s popular signature event, Fantasy in Lights, was kicking in during the holidays. Those revamped rooms drew rave reviews, so the move was made to rehab them all between January and March.

“We opened them back up on April 1,” said Callaway. “Our business was off during those three months because we were closed three months.”

The executive, grandson of the 60-year-old resort’s founders, Cason J. and Virginia Hand Callaway, and son of Howard “Bo” Callaway, a longtime gardens executive and foundation board member, said he “miscalculated” that group travel would pick back up quickly.

Sales have been flat because groups of people that had once stayed and played at Callaway Gardens went elsewhere for nicer hotel rooms and meeting facilities.

“I’m finding out it takes a while to win a group back,” Callaway said. “Groups book three months out, six months out, 12 months out. So we’re slowly growing our group business back.”

The CEO estimates it will take at least two years to generate enough revenue to pay off the $2.5 million in capital expenditures this year.

That’s why he decided two weeks ago to cut more than a dozen employees, eliminate 15 other positions and reduce hours for some jobs. He also is requiring employees to shoulder more of the cost of their health insurance.

The gardens’ full-, part-time and seasonal work force as of Tuesday was 783, down from 795, according to numbers supplied by marketing director Rachel Crumbley. Gate attendance through June this year is 36,371, compared to 23,843 through the first six months of 2012.

“I’m adjusting our business and fine-tuning it, and I hate it because we’ve got great people and great employees,” Callaway said. “But we’re having to scrimp and skinny down to get through this year so that our revenues exceed our expenditures. We’re never going to do anything else but that. That’s just a given from now on.”

Another move that the CEO expects will remain permanent is the closing of Callaway Gardens Jan. 1-11 each year, with it being one of the slowest periods for the resort following the large Fantasy in Lights crowds.

“Last year during that time we had almost no business. It’s just a very smart thing to do is close during a period of time when you have very slow business after Fantasy,” he said, explaining that’s when repairs and significant annual maintenance will be done.

Callaway said the hotel renovation, along with expansion of the gardens’ TreeTop Adventure zipline course and Aqua Island water attraction at Robin Lake Beach, are already showing results. Daily visitation is growing double digits. He simply needs the group business to pick up steam.

The executive said the resort is also starting to tinker with its operations in other ways.

A “Fabulous Fridays” event that allows visitors in for free, with a farmer’s market and entertainment, could be expanded to Thursdays and Saturday. The hope is to give people a taste of the resort so they will return and stay for a whole day or overnight.

There’s also the possibility that gate pricing will be changed next year.

“It may make sense to raise the price sometimes and lower it other times,” he said. “Instead of having a single price all year, we may need to have pricing that varies with demand ... The airlines do it, the hotels do it, Disney does it.”

Overall, Callaway said he feels good about the direction in which the gardens is headed. He also believes the economy is picking up and, with that, the group business will materialize again. The $1.5 million in yearly savings from the employee and service cuts should be a major help in the process, he said.

“I wish we had understood that groups react more slowly than individuals,” he said. “It’s not just the (hotel) rooms. It’s everything about your stay.

“And I think between 2010 and 2012 we lost our game while we were focused on survival. So I really do think our group experience wasn’t up to par for a couple of years there. They don’t just immediately come back. You have to go win it back.”

For the gardens, it has been a long road back from the $44 million in debt it racked up entering 2012. That financial bleeding was stemmed through two land sales made to Waffle House CEO Joe Rogers Jr. and Atlanta real-estate executive Brad Smith.

Those deals, combined with negotiations with lenders, including Columbus-based Synovus Financial Corp., helped get the debt load down to about $8 million last year, which Callaway has said is a manageable level for the resort.

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