In Anti-Luxe Times, Sheila Johnson's Middleburg Resort Goes Dormant

By Joel Achenbach

Wednesday, April 1, 2009

Picture in your mind a luxury resort -- no, "ultraluxury" -- in the heart of horse country. The winding driveway is lined with London plane trees. There's a stallion barn off to the right. Paddock fences gallop across the Piedmont.

The hotel is compact, with a stone facade. There's a library, a wine bar, a billiard room and a barnlike restaurant framed in vintage timbers. A standard room goes for $600 in season. Even the loo has a flat-screen TV, and the shower appears to be big enough for a polo match.

This is Salamander Resort & Spa, sprouting in a pasture a short walk from the center of Middleburg. It's still a construction site, with scraps of insulation littering bare concrete surfaces, but by summer the exterior will be finished, and from a distance it will resemble the five-star resort it aspires to be.

Except it will be empty. No guests. No furniture, even. The resort -- the ambitious, controversial enterprise of tycoon Sheila Johnson -- will go into a state of hibernation, the interiors unfinished, and the scheduled 2010 opening pushed off at least a year.

With construction already underway, Salamander ran into a cultural buzz saw: Luxury fell into societal disfavor. In our current economic environment, luxury has become almost obscene.

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Construction Continues at Salamander Resort

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Salamander Resort & Spa, the ambitious, contentious enterprise of tycoon Sheila Johnson, took years of politicking and persuasion to get off the ground. Now an economic double-whammy has delayed the resort's opening till spring of 2011. (Katherine Frey)

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Construction continues at the Salamander Resort & Spa in Middleburg. (Katherine Frey)

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Sheila Johnson tours her Salamander Resort & Spa in Middleburg. Construction continues despite the set back of the opening until spring of 2011. (Katherine Frey)

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The horse stables on the property overlook part of the town of Middleburg. (Katherine Frey)

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Sheila Johnson tours the construction site of an outdoor pool with individual cabanas at her Salamander Resort & Spa in Middleburg. Construction continues despite the set back of the opening till spring of 2011. (Katherine Frey)

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Sheila Johnson stands in the middle of what will be the main dining room at her Salamander Resort & Spa in Middleburg. (Katherine Frey)

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The tale of Salamander poses a question: When will luxury make a comeback? When will that whole panoply of indulgences and extravagances of the bubble years once again dare to show themselves in public?

Salamander's business strategy counts on corporations holding meetings and retreats, but that element of high-flying corporate life has taken on a bad odor since taxpayers began bailing out the financial sector. Congress has put limits on luxury travel in bailout legislation. In the travel industry, there are tales of nervous executives asking hotels to delete the words "resort" or "spa" from booking contracts.

Travel industry leaders have fought back with full-page newspaper ads and a White House meeting with President Obama. They say they suffered $1 billion in cancellations in the first two months of the year. Hotel executive J.W. Marriott Jr. lamented in an op-ed column in The Post that even companies not receiving bailout money are canceling corporate retreats for fear that the expenditures will look bad.

The luxury business might not be as intrinsic to the American identity as building cars or forging steel, but it still creates jobs, often in rural or off-the-beaten-path places. The U.S. Travel Association says that $101 billion was spent in 2007 on conventions and business meetings. In Middleburg, many residents were looking forward to the economic boost of Salamander. This was going to be good not just for Johnson and the high-flying executives, but for the local farriers.

Across the country, luxury hotels and resorts are suffering a real and a psychic emptiness. A couple of weeks ago, the venerable but increasingly vacant Greenbrier Resort in White Sulphur Springs, W.Va., filed for bankruptcy. Hard times have hit such gold-plated properties as the Breakers in Palm Beach, Fla., and the Sanctuary in Kiawah Island, S.C.

"The news has gotten progressively worse," said Prem Devadas, president of Salamander Hospitality. "Next spring will be even worse conditions than they are this spring in our business. Our industry, especially at the luxury level right now, is suffering."

Todd Gray, owner of the D.C. restaurant Equinox and the culinary director of Salamander, said high-end dining has been suffering across the region: "People are not out spending the money on the big wines. They're not spending the money on the lavish tasting menus."

Salamander might have been lucky: Had it not had to fight and claw its way through the permitting process, it might have opened this spring -- the worst imaginable time to unveil a sumptuous resort.

"Right now is not the time to open a resort or a spa. I mean, it just grates on you," said Middleburg town councilwoman Catherine "Bundles" Murdock. "It would just look terrible. We need to open up soup kitchens and victory gardens."

Salamander has the great advantage of being owned by a single individual. Johnson, co-founder of Black Entertainment Television, is one of America's wealthiest women. Reached in Florida at a golf tournament at another one of her resorts, Johnson hesitated when asked if she'd commit to a spring 2011 opening.

"We're just going to have to reassess and we'll see. You know, the Washington market could be different from what's happening in the rest of the country," she said.

She's upset by what she sees as the demonization of corporations and associations holding meetings at luxury resorts. This has been a recurring story going back to early October, when 70 employees of American International Group (AIG) spent $440,000 on a week-long retreat at the St. Regis resort in Monarch Beach, Calif., just a couple of weeks after the federal government gave the company an $85 billion loan. Denunciations -- and caricaturizations -- echoed across the country. "They were getting their manicures, their pedicures, massages, their facials, while the American people were paying their bills," said Rep. Elijah E. Cummings (D-Md.) in a fairly typical comment.

Johnson sees it differently.

"People have really got to get off of this. Especially the media. These companies, it's the only way they can survive," she said.

Luxury, in her view, is a corporate necessity.

"I get really upset when people make these blanket statements about what they're doing. They're not inside the halls of these corporations. If you put handcuffs on them and say you can't do this, you can't do that, you're going to lose everything. You're really going to see the economy collapse."

Because staffers need the boost.

"People that don't run corporations don't understand that you have the morale of your staff to keep up."

The delayed opening of Salamander is the latest chapter in a running Middleburg saga. The town is something of a modern-day anomaly: A rich-person's hangout that has never made the leap to being truly ritzy. The town has a number of chichi shops, but they're not national chains. Locals insist that the town isn't rich by any means. Of its 632 residents in the 2000 Census, about 1 in 10 lived below the poverty line.

Locals joke that the biggest change ever to hit town was when they finally put in a stoplight. (And the police chief promptly ran it.)

No one would mistake Middleburg for Southhampton. The sprawling gift store called the Fun Shop has been in the same family for half a century. You get coffee at the Cuppa Giddy Up. You get novels at Books & Crannies. You get bacon-and-eggs at the Coach Stop (you can also get a nice steak dinner -- except for filet mignon, removed from the menu when the economy tanked).

It's when you leave the town limits that you enter the truly magnificent landscape of horse country. Open fields are lined with fieldstone walls. Antebellum mansions survey their domain. Dense woods, with trees just now beginning to bud, are threaded by trails pounded by hooves during fox-hunting season.

Middleburg and its environs show how wealth can be a powerful preservative. The rich could have put up subdivisions to feed the big corporations near Dulles airport, but instead they chose to keep things so unchanged that you half expect the Confederate cavalry to come riding down Route 50.

Johnson roiled hunt country when, having purchased the late Pamela Harriman's 340-acre farm on the edge of the town, she announced in 2003 her intention to build an upscale 40-room inn.

At the time, Devadas said, ultraluxury resorts were thriving.

"It was highly recognized that the highest end of luxury was where there was the least amount of inventory and growing demand -- which, by the way, we believe will come back and be true for a long time," he said.

The plan incited great umbrage. Johnson's vow to put Middleburg on the map upset locals who didn't think the town needed any more attention. The fight intensified as Johnson's ambitions evolved, and her 40-room inn became a 120-room resort -- and then 168 rooms, plus 50 houses and office space. She agreed to build a sewage treatment plant for the town, and the town agreed to annex the resort. The project won town council approval in 2007.

By all accounts, the mood in town has shifted since. Retailers were getting used to the idea of all the foot traffic that would come from the resort. Salamander would bring 20,000 hotel guests to town a year, plus thousands more visitors to the spa, by Devadas's estimate.

But that's in the future -- somewhere out there in the murky distance.

For now Devadas is supervising the fine details of the construction. Driving through the property, he paused to chat with a construction crew leader about selecting the right kind of caulk. The first caulk was too light. This latest batch of caulk was lighter still. Completely unacceptable, Devadas declared. "We'll get it right," he said firmly.

"This kind of thing, at the highest end of luxury, it's all about the details," Devadas said as he drove away.

And so it continues to rise, this resort, hoping for better times ahead, and the rehabilitation of luxury. Build it and they will come -- maybe.

Staff researcher Julie Tate contributed to this report.

Tagged: golf, hotel, Middleburg, real estate, tourism, travel

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