MDI rivalry sends tremors across the lodging landscape

Posted Aug. 07, 2009, at 9:56 p.m.
Last modified Jan. 30, 2011, at 11:59 a.m.

David J. Witham and Thomas T. Walsh have been competitors in Bar Harbor for years, each eyeing the other as he buys and builds hotels in this scenic and largely seasonal tourist town.

The two hoteliers have been aggressively expanding the number of their local holdings in the past year, consolidating ownership of local hotels and reducing the number of people who own commercial property along Bar Harbor’s downtown waterfront.

In recent weeks, their interest in each other’s work has become more noticeable as Witham has been attending planning board meetings to scrutinize and comment on a proposal from Walsh’s company, Ocean Properties Ltd., to build a five-story, $12 million hotel on West Street. Walsh’s as-yet-unnamed hotel would be on the other side of Agamont Park, which overlooks the town pier and harbor, from Witham’s prized waterfront property, the 153-room Bar Harbor Inn.

It is not the first time the two men have dueled publicly over a development or acquisition proposal, and the activity has not gone unnoticed by local officials and residents. Despite the significant role that Witham’s and Walsh’s hotels play in the local economy, some residents and officials have expressed concern that their growing slices of the local hotel industry and the bristling competitive rivalry between the two men potentially could have a downside for Bar Harbor.

“Anytime two individuals control that many rooms in a community, it’s not good for the mom-and-pop businesses,” David Bowden, a former member of the Town Council and the planning board, said recently.

Bowden is the third generation of his family to own and operate a small motel and cottage business in the village of Salisbury Cove.

“One guy keeps building more, and the other guy keeps buying up what is there,” Bowden said.

Hotel properties

The 121-room hotel Walsh is proposing would be a significant addition to Ocean Properties’ local holdings, which include the Harborside Hotel, Bar Harbor Regency, the Days Inn and Park Entrance Motel. Over the past year, Walsh, a Bangor native, has been buying up properties along lower Rodick Street in order to consolidate them into his plans to build the West Street hotel, which would cover the entire block on the south side of West Street between Main and Rodick streets.

The total assessed value of Walsh’s four existing local hotel properties, which have more than 750 rooms combined, is more than $47 million. Also among the more than 100 hotels owned by Ocean Properties in North America are the Samoset Resort in Rockport, the Sagamore Resort in Bolton Landing, N.Y., and hotels in Bangor, Auburn, Bath and South Portland.

Witham, a Massachusetts native, also has added several local properties to his portfolio over the past several years. In the past decade or so he has built the Acadia Inn and the Bar Harbor Grand Hotel, and since May 2008 he has purchased the Atlantic Oceanside Hotel, Aurora Inn, the Best Western and the Quality Inn. The seven local hotel properties owned by Witham and his family, including the Bar Harbor Inn, have about 750 rooms total and a cumulative assessed value of $34.5 million.

This year, Witham also has purchased the White Birches Motel in Hancock and the unfinished Hampton Inn in Ellsworth.

West Street acquisitions

According to Bowden, the rivalry between Witham and Walsh dates back at least a decade to when Walsh bought the then-vacant Bar Harbor Club on West Street and wanted to convert it into a hotel. Walsh could not get voter approval to change the club’s zoning to permit lodging, but he later was able to acquire the adjacent Golden Anchor Inn, which he since has redeveloped into the Harborside Hotel. For years, the club sat vacant and run-down until Walsh decided to renovate it along with the adjacent Harborside property.

Witham, apparently concerned about what impact the Harborside would have on business at his nearby Bar Harbor Inn, unsuccessfully appealed the planning board’s 2000 approval of Walsh’s plans for the Harborside Hotel. According to town records, Walsh bought the Golden Anchor property, which now has an assessed value of nearly $21 million, for $5.8 million in 2000.

That same year, a court fight erupted over the hoteliers’ competing efforts to acquire the Park Entrance Motel property in Hulls Cove, which Walsh ended up buying for $5.3 million at a foreclosure auction on Sept. 11, 2001.

Bowden said the rivalry between the two men is accelerating the pace of change in the local lodging business and raising its level of competition to a point where it is making it harder for small hotel owners to adjust and offer competitive services. Developments in the wider economy and general business trends are behind part of the changing hotel climate in Bar Harbor, he said, but Walsh and Witham are driving up the stakes.

“These guys are pushing it,” Bowden said. “You can see what happened in other parts of the country, and you can see it happening here. In the next 10 years, you’re going to see a lot of changes in this community.”

One change that has been under way for a while is a reduction in the number of people who own property along Bar Harbor’s commercial downtown waterfront. Aside from the town itself, which owns some waterfront parks and a pier, Witham and Walsh are the only ones left.

Residents Ed and Anne Damm, who used to own a waterfront building on West Street, have publicly voiced concerns about Walsh’s renovations at the adjacent Harborside property. But earlier this year they apparently worked out an agreement to sell their building to Walsh, who owns the properties on either side.

Walsh, however, failed to show up at the closing that would have made the transaction final, according to weekly newspaper reports. Seeing an opportunity, Witham stepped in and bought the 2,000-square-foot, three-story building from the Damms in April and now is renting it out.

When recently contacted by phone, Ed Damm declined to comment for this story.

Municipal perspective

Anne Krieg, Bar Harbor’s planning director, said recently that from an economic development perspective, it is better for towns or regions to have diverse ownership and types of businesses rather than a few. If a town or regional economy is largely dependent on a small number of companies and something unforeseen happens to one of them, she said, it could have an adverse impact.

“It’s kind of like having all your eggs in one basket,” Krieg said.

The same concern applies to services offered in a commercial area such as a downtown business district, the planner said. She said a relative lack of variety of services offered in an area could result in fewer people frequenting that area.

For this reason, Krieg said, she would like to see Walsh’s proposal include space for the Bar Harbor Whale Museum, which now occupies a small building that would be demolished to make room for the hotel. She said Ocean Properties initially told town officials the museum would have a storefront space in the new hotel, but now it seems less certain that it will.

“You want to have things other than retail and restaurants to draw [people] in,” Krieg said.

Eben Salvatore, Ocean Properties’ local operations manager, said this week that there probably won’t be enough room in the new hotel for the museum. But he said the firm intends to keep the museum in the neighborhood.

“We’ve always been committed to [the museum],” Salvatore said. “It’s too good of a function not to have down there. We’re trying to find the best place for them across the street.”

Dana Reed, Bar Harbor’s town manager since 1986, said recently that both Witham and Walsh have run into code enforcement and construction permit issues with the town over the years. He said such violations are not unusual for people who build large projects in the town’s commercial zones.

“Bar Harbor has always had a love-hate relationship with development,” Reed said. “[The hoteliers] are not unique in that. We have very restrictive development ordinances.”

Reed said the natural beauty of Mount Desert Island, the nearby presence of Acadia National Park, and the town’s history of small-scale development and small-business ownership help make Witham’s and Walsh’s business plans in Bar Harbor stand out compared to other local commercial property owners.

“They’re very high-profile,” Reed said. “They are both substantial sources of property tax revenue for the town.”

Both men also are known to support many nonprofit organizations such as the Chamber of Commerce and College of the Atlantic and for donating money to political candidates. Walsh has supported and maintained close connections to leading Democrats in the state, while Witham has been known to make financial contributions to both Republicans and Democrats.

Chris Fogg, the Chamber’s executive director, said both Witham and Walsh routinely support the town’s annual Fourth of July celebrations, which include a morning parade and evening fireworks.

“Both of them are very active in the Chamber,” Fogg said. “They do a lot for the town.”

‘I’m a competitor’

The main sticking points for Walsh’s new hotel proposal seem to be the proposed height of the building and whether it would have enough parking. Ocean Properties is proposing to build the hotel to a height of 45 feet, but members of the planning board have indicated they believe local ordinances limit the allowable height to 35 feet.

At the planning board’s July 15 meeting, Witham urged the board to resolve the height issue before it moved on to a discussion about parking. He said that to determine whether Walsh can provide enough parking, the planning board will have to decide how many rooms Walsh can fit within the legal height limit.

“How can you go forward on parking if you don’t know how many rooms there are?” Witham asked.

The planning board, which meets twice a month, is expected to go over Walsh’s proposed plans at several more meetings before it decides whether to approve them, according to people involved in the process.

Witham said later that he is neither for nor against Walsh’s planned hotel.

“I’m an abutter. I’m a competitor,” Witham said afterthe meeting. “I want to make sure the project follows the rules.”

Walsh, during a brief interview immediately after the meeting, said he was not troubled by Witham’s interest in his project.

“He’s very welcome to come [to the meetings],” Walsh said, adding that he doesn’t think anyone from Ocean Properties has ever attended a planning board meeting when it was considering an application from Witham. “That’s his right to come.”

Growth and influence

Walsh brushed aside the suggestion that Ocean Properties is out to control all of Bar Harbor’s hotel business or access to its downtown waterfront. All of the firm’s waterfront properties are accessible to the public, he said, and for the most part Ocean Properties has acquired them over a few decades, as they became available and without any sort of master plan.

The commercial properties along West Street haven’t always been in high demand, Walsh suggested. The Bar Harbor Club — which according to the town’s online assessing database was acquired by Ocean Properties in 1993 for nearly $800,000 — was run-down and unused before his company bought it. The club property, which is zoned and assessed separately from the adjacent Harborside Hotel, now has an assessed value of more than $10 million.

“It was for sale for a long time,” Walsh said. “We’ve worked hard to restore it.”

Walsh said that despite its significant presence in Bar Harbor, Ocean Properties has relatively little say in how the town is run or, on the whole, how it is developed. He said that when Ocean Properties applied for permits in New York to upgrade the Sagamore Resort, which it bought last year, it obtained all of the necessary permits in a matter of weeks. His latest proposal in Bar Harbor, he said, was submitted to the town about a year ago.

“Our influence in this town is very small,” Walsh said.

Similarly, Witham said recently that he does not have any ongoing plans to continue expanding his Bar Harbor holdings. He said he believes there are 31 hotel properties in Bar Harbor. Between himself and Walsh, they own 11 of them. Two others, Wonder View Inn & Suites and Bluenose Inn, the latter of which used to be owned by Witham, are owned by Lafayette Hotels, a privately owned firm based in Bangor that owns 23 hotels in Maine and New Hampshire.

Witham said the fact that the number of hotels he owns in Bar Harbor and off-island has been growing shouldn’t be seen as a cause for concern by residents or business owners.

“I’m not sure what the concern would be,” Witham said, adding that he used to own the Quality Inn before he recently purchased it back from the people he had sold it to, Peter and Sally Vacca.

He said there may be some group marketing opportunities with his multiple properties, but there is no reason any of them would affect other lodging businesses in town. Customers are not motivated by who owns what hotel, he suggested.

“Each property stands on its own,” he said. “The fact that I own them doesn’t matter.”

Ken Smith, a former town councilor who owns and runs an inn across West Street from the Bar Harbor Club, recently declined to draw direct comparisons between Witham and Walsh. Both men, he said, have spent a lot of money to build and maintain high-end properties in town.

Smith said that because Bar Harbor’s tourist season is relatively short, there is fierce competition among many businesses in town, especially those that offer similar services. Besides having to satisfy Bar Harbor’s planning and code enforcement officials, many local businesses are closely watched by their competitors, he said. If a store puts up too many signs or maybe has a fire exit blocked, the chances are good that word about it will make its way to the town office, he said.

“This is one of the toughest communities to do business in,” Smith said. “I don’t know what it is that drives [Walsh and Witham] to expand, but that’s free enterprise.”

···

Thomas T. Walsh

Age: 80

History: Born in Bangor; now lives in North Hampton, N.H., and Key West, Fla.

In 1970s, founded Ocean Properties Ltd., which now owns more than 100 hotel properties in the United States, Canada and the Caribbean and is estimated by online business information services to have had more than $195 million in revenues in 2008.

Built his first hotel, the Plaza Hotel, in Brewer in the 1960s.

Bar Harbor properties: Bar Harbor Regency Hotel, Harborside Hotel & Marina, Park Entrance Motel and Days Inn.

Number of rooms: more than 750.

Total assessed value: more than $47 million.

Walsh also owns former Days Inn in Trenton, now used exclusively to house Ocean Properties employees.

Owns six other hotel properties in Maine, including one each in Bangor, Auburn and Bath, two in South Portland, and the Samoset Resort in Rockport. The company employs more than 400 people in Bar Harbor in the summer and approximately 1,000 total in Maine.

David J. Witham

Age: 69

History: Born in Haverhill, Mass.; now lives in Bar Harbor and Boston.

Founded Witham Family Limited Partnership in 1996.

Bar Harbor properties: Bar Harbor Inn, Acadia Inn, Bar Harbor Grand Hotel, Atlantic Oceanside Hotel, Quality Inn, Aurora Inn and Best Western Inn.

Number of rooms: approximately 750.

Total assessed value: more than $34 million.

Witham also owns unfinished Hampton Inn in Ellsworth, White Birches motel in Hancock, and former Song of the Sea retail building on Bar Harbor’s West Street. Local properties formerly owned by Witham and his family include Bluenose Inn, now owned by Lafayette Hotels Group, and Maine Street Motel, now owned by Mount Desert Island Hospital.

Employs approximately 350 people in Bar Harbor. Information on Witham’s lodging revenues were unavailable.

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