Resort a gamble that’s still paying off

Twenty years ago this week, the Coeur d’Alene Resort threw open its doors to fanfare and skepticism.

The day before the first guests arrived, an estimated 20,000 gawkers waited in line for up to five hours to tour the $60 million hotel during an open house. Even Forbes magazine sent a reporter. Its July 1986 edition carried a story under the headline, “Duane Hagadone has built himself a fancy resort in the middle of nowhere. Why?”

On the eve of the anniversary, Hagadone’s advertising firm likes to contrast the Forbes story with the number of people who have stayed overnight at the Coeur d’Alene Resort during the last two decades – 3.7 million – and the 18 million meals served in its restaurants.

Hagadone Hospitality estimates the resort’s economic impact to the region at $1.5 billion. Its influence, however, goes beyond tangibles.

Like it or not, the resort changed North Idaho’s image. Aggressive marketing turned “Coeur d’Alene” into a brand. People who attended conventions at the resort returned to the area for vacations and second-home purchases, and Coeur d’Alene – a faltering mill town – emerged as a nationally known destination with a booming real estate economy.

Hagadone’s vision was pioneering for its time, combining a shrewd awareness of the market for high-end properties with an advertising campaign that reached far beyond the Inland Northwest, said Jonathan Coe, general manager of the Coeur d’Alene Area Chamber of Commerce.

“Clearly the resort was a very bold investment. It put Coeur d’Alene on the map,” Coe said. “It created a name and a reputation for us throughout the country.”

The 5-star golf course, built on a former sawmill site, helped cement the resort’s reputation. “Anyone who knows anything about golf has heard about the course and its floating green,” Coe said.

The Forbes article, which included the line “Will the Coeur d’Alene become his Waterloo?” ended up playing a minor role in the resort’s success, according to Hagadone.

“The phone started ringing because a lot of people wanted to go to a world class resort in the middle of nowhere,” he said Tuesday in a phone interview from his winter home in Palm Springs, Calif.

Hagadone, a third-generation Coeur d’Alene resident, remains a prominent and at times controversial figure, whose influence in local politics draws references to “Coeur ‘Duane.” In 2004, he proposed closing down two blocks of Sherman Avenue to build a memorial garden to his late parents. The proposal drew an outcry from downtown merchants. Hagadone later withdrew it.

His latest projects include $4.5 million to $6 million condos at the base of Potlatch Hill, and plans to build condos, shops and offices on Blackwell Island. But the Coeur d’Alene Resort remains his signature development.

Hagadone, 73, said he spent years dreaming about a high-end resort on Lake Coeur d’Alene. Aside from Idaho’s Sun Valley and a few resorts in Oregon, the Northwest of 20 years ago didn’t have much in terms of landmark properties, he said.

Hagadone’s business interest was a chain of newspapers, including the Coeur d’Alene Press. The newspaper was one of the largest corporate accounts at the North Shore, a 180-room hotel and convention center overlooking Lake Coeur d’Alene.

“I always thought it was a world-class site, deserving of a world-class hotel,” Hagadone said. “When the opportunity came up to buy the hotel, I took advantage of it.”

In 1983, Hagadone acquired a controlling interest in the property, buying out North Shore owner Bob Templin in a hostile takeover. Jerry Jaeger, the North Shore’s manager and part-owner, stayed with Hagadone, becoming the president of Hagadone Hospitality. Jaeger is also a minority owner in the resort.

The Coeur d’Alene Resort’s first guests checked in on May, 6, 1986. Room rates ranged from $40 to $99, with the exception of the luxurious “Hagadone” and “Jaeger” penthouses, which rented for $1,500 and $800 a night, respectively.

According to the Coeur d’Alene Resort’s Web site, room rates now start around $159 per night. The Jaeger suite goes for $2,500, while the Hagadone suite – complete with a personal butler – rings in at $5,000.

The resort had an immediate impact on tourism.

“We started to notice a tremendous growth in room tax collections after the Coeur d’Alene Resort opened,” said Carl Wilgus, assistant deputy director for the Idaho Commerce & Labor Department.

During the late 1980s, taxes collected from hotel receipts grew by 12 percent to 16 percent yearly in Kootenai County. “When he built there, there were a lot of people shaking their heads, wondering what he was doing,” Wilgus said. “He made believers out of all of them.”

According to Hagadone, the only thing he overbuilt was Coeur d’Alene Resort’s parking garage. The garage’s 500-plus stalls seldom fill up. Most of the resort’s guests fly into Spokane, and take a shuttle to the Coeur d’Alene.

Convention-goers remain the bread-and-butter business for the resort, accounting for about 50 percent of its revenues. Hagadone, who does not release financial data, said that market, which softened during the downturn in corporate travel after the 9/11 terrorist attacks, has finally rebounded. He’s expecting the resort bookings to hit a new record this year.

Hagadone Hospitality recently sank $20 million into a makeover for the resort, remodeling restaurants and guest rooms, and doubling the size of the spa. In 2004, for the first time in the resort industry, spa revenue exceeded golf revenue.

The spa will offer “sports facials” for men, along with massage, manicures and “anti-aging” treatments such as Botox and neck contours. It’s part of keeping up with the times, Hagadone said.

“If you’re going to compete,” he said, “you need a world class health spa.”