The Insiders' Guide to St. Barths: Sea Island

A sad tale . . .

October 1, 2008
An Unwelcome Guest Intrudes on a Worry-Free Zone for the Rich

By ROBBIE BROWN
SEA ISLAND, Ga. — Four years ago, when President Bush was the host of a summit meeting of world leaders on this tiny, privately owned resort island, bestowing prestige and bringing increased tourism, Sea Island seemed recession proof.

So confident in the future were the owners of the high-priced resort here that they poured $350 million into renovations. They opened upscale restaurants. They built waterfront suites costing $5,000 a night. They installed a 100-seat movie theater, a spa, a wine cellar, equestrian facilities and three new pools.

Business boomed, and superlatives accumulated: Condé Nast Traveler named Sea Island among the “World’s Best Places to Stay,” and Golf Digest called it the best golf resort in North America.

But those days seemed ancient last month when the resort’s owner, the Sea Island Company, fired about 500 employees, nearly 25 percent of the workforce, to stanch its financial losses amid the national downturns in tourism and real estate. Those who were dismissed ranged from cabana waiters to senior executives.

To many local residents, the island has become a cautionary tale. If a falling tide lowers all boats, they say, then Sea Island’s woes reveal the faltering economy’s toll on even the wealthiest, best-protected regions of America.

“Now we know how Detroit feels,” said Harry Aiken Jr., a bar operator on neighboring St. Simons Island. “Everybody knew Sea Island was overextended, but we thought they could always just sell more property.”

In many ways, Sea Island still seems a breezy, worry-free Old South getaway. The cost of the islands’ homes averages $3.2 million, according to the Sea Island Company. Brooks Brothers could stock its catalog with Sea Island’s bronzed, shapely (and almost exclusively white) bodies. And politicians, professional athletes and C.E.O.’s still dream of retiring to Sea Island’s manicured, oak-studded mansions, understatedly called cottages.

But the island has attracted fewer business conferences than usual this year, said Brian Young, the resort’s general manager, although personal travel has remained relatively steady. And while houses are selling, including one for more than $4 million this month, C. Allen Brown, the company’s vice president for real estate, said he had “never seen this many potential buyers waiting on the sidelines.”

Fifty of Sea Island’s 600 houses are for sale, Mr. Brown said, compared with fewer than 35 this time last year.

In the sun-baked towns that surround Sea Island and rely on its high-spending clientele, people have noticed a slump in business and want to know what caused it: the national economy, natural cycles in the life of a resort or poor financial decisions?

The economy was only one reason for the cutbacks, said the chief executive of the Sea Island Company, Bill Jones III. Seasonal employees were dismissed as summer crowds died down and many people hired during the renovation were no longer necessary, he said. But he acknowledged the economy’s significant role.

“Folks are waiting for the market to bottom out,” Mr. Jones said. “They say, ‘Until we find out where this economy is going, we can’t move down here,’ and I don’t blame them.”

But some residents say local miscalculations, not the national economy, caused the layoffs. (Fired employees signed agreements with Sea Island not to publicly discuss the causes or conditions of their dismissals, several former employees said.)

From 1998 to 2006, Sea Island underwent a sweeping renovation, updating three golf courses and adding a 65,000-square-foot spa and fitness center, a 2,000-bottle wine cellar and other costly accommodations. Then the economy turned sour.

“Rich as they were, there was a real naïveté about money,” Nancy Thomason, the longtime owner of a St. Simons second-hand bookstore, said of the Sea Island Company. “They were used to being millionaires and playing that game, but they didn’t have the money.”

Since its development in the 1920s, Sea Island has attracted a well-heeled and powerful clientele, including visits from six United States presidents. In recent years, home owners have included former Attorney General Griffin B. Bell, the Atlanta Braves pitcher John Smoltz and the CBS News anchor Bob Schieffer.

So the For Sale signs and staff cuts cabled a frightening message to other resort owners: If it can happen here, it can happen anywhere.

“I think everyone is tightening their belts,” said Jim Sprouse, the executive director of the Georgia Hotel and Lodging Association. “It’s an industry-wide issue as people slow down their travel.”

The greatest slump has been in real estate. In the areas surrounding Sea Island, the average home this year sold for $17,000 less than it did last year and took three weeks longer to sell, said R. Frederick Stroud, a broker at Georgia Coast Realty.

The problem is not a lack of interest in buying houses on the Golden Isles, Mr. Stroud said. Instead, banks that normally issue loans for second homes are tightening their standards amid the national financial crises. With fewer people qualifying for loans, only the wealthiest buyers can afford Sea Island homes.

Sea Island’s defenders say the company deserves the community’s support. The Jones family, which has owned the resort for 80 years, is “the backbone of the hospitality industry,” said Woody Woodside, president of the local chamber of commerce.

“The jobs they’ve created, the taxes they’ve created, that’s one thing,” he said. “But the indirect impact — it reaches every corner of this island. The whole island is in support of a rally by Sea Island.”

But the firings have worsened class rivalries in a region of great extremes of wealth.

“Down here, it’s really rich people and it’s poor people,” Mr. Aiken, the bar operator on St. Simons, said, gesturing toward Sea Island. “A lot of people over here are envious of people over there. And now Sea Island employees, who don’t live there, are paying the price.”

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