New life for the Nicollet Island Inn

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January 17, 2005 // UPDATED 1:48 pm - April 26, 2007
By: Scott Russell
Scott Russell

Restarting power breakfasts and developing a fabulous bar are among new owner's goals

The historic Nicollet Island Inn's prospective new owner promises to bring back weekday breakfasts, catering and other upgrades - including an in-house spa - to make it among the five most romantic destinations in America.

Buyer-in-waiting Larry Abdo says he also wants the inn to have "neighborhood appeal."

Abdo was reluctant to comment on his business plan until the Minneapolis Park and Recreation Board officially approved the business sale. The Park Board owns the land and must approve transferring the 112-year-old building's lease to Abdo.

According to a Dec. 27 Park Board memo, Abdo's goals include:

- Becoming "the" hotel for women in the Twin Cities;

- Satisfying the surrounding neighborhood's drinking and dining needs;

- Returning the inn to its former position as a "power" breakfast place of choice for local business owners;

- Introducing and/or bringing back iconic menu items such as Caf Diablo, and tableside Caesar salad;

- Improving the brunch menu.

Other revenue-generating ideas include offering bridal packages, high teas, romantic weekend packages and the in-house spa.

Abdo - whose Anxon, Inc. has completed Downtown's SixQuebec condo conversion, 601 Marquette Ave. S. and develops drug stores nationwide - has committed an initial $500,000 investment to refurbish the guest rooms, improve the banquet facility and commons, and improve marketing.

However, an independent analysis says he may have to invest far more than that.

Money and vision

The Park Board currently leases it's land to IsleWest Associates LLP and partners Craig Christensen and Howard Bergerud, who own the 24-room inn and restaurant. The partners would sell the business to Abdo and the Island Sash and Door Company (the namesake of the inn's original 1893 tenant.) The Park Board would transfer IsleWest's lease to Abdo but not sell the land.

The Park Board's Administration and Finance Committee approved the deal Jan. 5. The full Board is expected to approve the measure Wednesday, Jan. 19, clearing the way for the sale.

Abdo has passed a financial review and other hurdles for the lease transfer, said Don Siggelkow, general manager of administration.

The Park Board also hired restaurant consultant Idein to review Abdo's business plan.

Idein's analysis said Abdo had the financial resources and vision to turn the inn into a significant dining and travel destination. However, given Abdo's target audience, he would have to invest more than $500,000.

"The destination hotel & inn market in the U.S. has become highly competitive," the analysis said. "It's no longer enough to offer a fireplace and a pleasant room! Consumers seek out high-end spa facilities, interesting shopping and dining experiences, and rooms that offer everything from high-thread-count sheets to high-speed Internet connections and plasma TVs. This all comes at a cost to the developer of the property."

Idein also raised concerns that Abdo did not have inn and full-service restaurant experience.

(Abdo has run fast, casual-style restaurants such as Pocket Pies, Walkin' Dog, Dairy Queen and more recently My Burger in the SixQuebec skyway, Idein's analysis said.)

Abdo told the Park Board he had hired Michael Tewey to run the inn. Tewey has banquet and restaurant experience as general manager at Downtown's former Whitney Hotel, he said.

Tewey was also general manager at Lord Fletcher's in Minnetonka, the area's premier outdoor summertime spot - "and I want to bring that to our outside space at the inn," Abdo said.

As general manager at McCormick and Schmicks, Tewey built their business from the bar out, Abdo said. The inn has a fabulous-but-underutilized bar that Tewey could improve, he added.

The Park Board will get a financial windfall from the inn's sale and, if Abdo increases revenues, a share of his gains.

The lease gives the Park Board 5 percent of the estimated $2 million business sale price, or $100,000. That money will pay for upgrades at the Minnehaha or Lake Calhoun refectories.

In addition, the park system gets 3.5 percent of the inn's annual gross sales, or $110,000 a year, whichever is greater.

According to Park Board data from recent years, the inn's sales peaked at over $4.3 million in 2000, when the Park Board received $152,861. By 2003, inn revenue fell to $3.4 million, and the Park Board's share was $120,158, a $32,703 drop. (The 2004 data was not available, but the inn dropped its weekday breakfasts last year.)

Said Sigglekow, "I don't think it [revenue] will grow dramatically beyond what it was. But we would like to get it back to where it was. It is important that they reestablish the catering business. That is where their loss came in."

A perilous past

The inn has had a long and, at times, financially stormy history.

According to a history prepared by inn owners:

Built in 1893 as the Island Sash and Door Company, the business was foreclosed upon in 1899. Other industries used the building until 1913, when the Salvation Army bought it and converted it to a men's shelter, which operated for almost 60 years.

The Minneapolis Housing and Redevelopment Authority bought it in 1972. It stood vacant for several years.

According to Minneapolis Public Library news clipping files:

Alan and Beth Fischlowitz opened the Nicollet Island Inn on July 19, 1982. It closed in March 1986 under a mountain of debt, leaving contractors, vendors, investors and more than 300 employees unpaid. The Nicollet Island Inn Co. and Nicollet Island Partners filed for bankruptcy.

IsleWest bought the building in 1987 for $1.13 million and reopened the inn in 1988.

Siggelkow said the lease makes Christensen and Bergerud personally liable for any business debt. Before they can sell the business to Abdo, Christensen and Bergerud need the Park Board to release them from that liability.

Abdo will also be personally liable, Sigglekow said.

Christensen said his and Bergerud's primary business is developing Walgreens stores. Abdo is a friend of theirs and someone with whom they have done business in the past.

"We have enjoyed our ownership and involvement [with the inn]," Christensen said. "It is time to move along and let somebody else come in and put some new energy into it."