Can a New Owner Modernize the Greenbrier Resort?

When guests approach the entrance of the Greenbrier Resort, they're usually impressed by the Greek Revival architecture, the 6,500-acre grounds, and the knowledge that they're walking in the footsteps of historical figures who've vacationed here. But when Jim Justice looked over the 230-year-old resort last summer, he saw room for improvement. "The trees are too big—this area needs to be opened up so people can see it better," he says, pacing the garden outside the north entranceway. In the lobby, he shakes his head. "This is all screwed up," he says, pointing to the way guests come down a grand stairway and are forced to do a U-turn to find the check-in desk. "The registration desk needs to go here," along the back wall. Then there's the gym, located in a building near the golf courses. "You're in your sweats, and you have to get on a bus?" he says, incredulous.

For centuries the Greenbrier, in White Sulphur Springs, W.Va., has been a destination for moneyed Southerners and corporate executives on retreat. But over the past decade the 721-room resort has fallen on hard times. In 2000 the Mobil Travel Guide took away its five-star rating, and younger travelers have been turned off by its formality and its lack of nightlife. After years of small losses, by 2008 the Greenbrier was losing $38 million a year—and last spring, the resort, whose guests once included Andrew Jackson, Davy Crockett, and Dolley Madison, filed for bankruptcy.

That's when Justice, a rich local entrepreneur, opened his checkbook. The new owner loves the Greenbrier's quaint traditions, but he's blunt about its shortcomings. "In its own way, it had dissolved into a really elegant retirement home," he says. To revive it, he aims to spend up to $100 million to build a casino, revamp its restaurants, and make it more accessible to travelers. Justice paid just $20 million for the place, which makes him optimistic. "It's the buy of the century if we're able to accomplish the turnaround," he says.

The economy won't help. While all travel businesses have suffered during the downturn, resort hotels have been hit especially hard as their upscale clientele scaled back. Adding to the Greenbrier's challenge: it's particularly reliant on corporate junkets, which declined dramatically after the public outcry that bailout-recipient AIG was still hosting posh getaways. Even if the economy improves, Justice faces a tricky balancing act in modernizing the Greenbrier—and adding amenities like a casino—without disrupting the history and tradition that are its best attributes. "There are a lot of people watching this and thinking this guy is either really brilliant or hopelessly misguided," says Peter Yesawich, CEO of the travel consulting firm Y Partnership.

The Greenbrier has been attracting visitors since 1787, when settlers began bathing in curative water from its sulfur spring. By 1860 five sitting U.S. presidents had vacationed there. The resort was converted to an Army hospital during World War II (as it had been during the Civil War) and afterward was redesigned by society decorator Dorothy Draper, whose bold color scheme still prevails. In the 1950s, President Eisenhower—a frequent guest—cut a deal to build a top-secret bunker underneath a new wing of the resort. Behind huge blast doors lay a secure facility designed to house Congress during a crisis. The bunker's existence was revealed by The Washington Post in 1992, and it now functions as a museum.

In many ways the Cold War years were the Greenbrier's heyday. During the 1970s and 1980s, companies like General Motors would book the entire resort for a week to host dealers. Until the 1980s, there were only a handful of iconic U.S. resort hotels—places like the Breakers in Palm Beach, Fla., and the Arizona Biltmore in Phoenix—that competed with the Greenbrier. But during the mid-1980s, "the industry just exploded, with many, many hundreds of choices of very high-end resorts," says Steve Bartolin, the Greenbrier's general manager from 1987 to 1991 and now CEO of the Broadmoor, a five-star rival in Colorado. Some of the biggest competition emerged from Ritz-Carlton and Four Seasons, both of which expanded dramatically during the 1980s. And as new resorts opened, guests' attitudes changed: instead of ritual, many began to prefer novelty. That's especially true for corporate meeting planners, who don't win points for going back to the same destination year after year.

The Greenbrier's sedateness hasn't helped. During the day it features 54 holes of golf, a spa, pools, skeet shooting, and falconry classes. But during a NEWSWEEK visit, the hotel's main bar sat empty at 9:10 p.m. Hallway signs say THE SOUTH IS SLEEPING, urging quiet. Financially, the Greenbrier's big problem has been labor costs. At its peak in 2004, the resort employed 1,600 workers, far more than comparable properties. In early 2008, during contract talks over new labor agreements, the Greenbrier's unions threatened to strike, causing mass cancellations by corporate groups. CSX, the railroad company that owned the Greenbrier for nearly a century, tried to sell it, without success; instead, it chose bankruptcy.

That's when Jim Justice entered the picture. Justice, 58 and the son of a coal-mining entrepreneur, is a lifelong West Virginian. After college at nearby Marshall University, Justice earned an M.B.A. and launched an agricultural business, tractor dealerships, and a Christmas-tree farm. When his father died in 1993, he added the coal-mining operation to his growing portfolio; today he presides over a sprawling private company worth hundreds of millions of dollars. He also serves as the girls' basketball coach at Greenbrier East High, and he'd grown upset watching his players' parents lose their jobs as the Greenbrier downsized. When it went bankrupt, "I thought, 'Dag-gone it, I can turn this whole thing around.' "

Stretched out in a wing chair a few weeks after the purchase, Justice, who has zero hotel-industry experience, described plans to enliven the resort. "You can retain its elegance and its stateliness and all that, but you've got to get some energy back in the place," he says. Within weeks he'd persuaded the PGA to bring a golf tournament this summer; by October he'd converted a mothballed restaurant into an upscale steakhouse and opened a small casino in an existing tavern. By May 1 he'll unveil his biggest improvement: a large new underground casino. Standing in the main lobby, Justice points to the area where he envisions a jazz band and a sushi bar. "It will just be a fun experience, not a hard-core gambling deal or a place we want people to come to try to win money to pay the power bill," he says. Between the costs of the casino, other planned renovations, and the hotel's continuing losses, Justice expects to put $100 million into the Greenbrier. Outsiders aren't sure he'll earn it back. Industry veterans say casinos typically require lots of foot traffic to turn a profit, but the Greenbrier's casino will be open only to hotel guests, and it's not clear how much time the clientele will spend gambling.

For his part, Justice swears the Greenbrier will turn a profit in 2010. By the end of January, he expects to announce new deals with airlines to offer more direct flights to the nearby airport. Call volume to the reservation line is up sharply, he says; younger guests are checking in, and occupancy is running ahead of projections. "All the excitement we wanted to generate, we've surely done," he says. Still, whether he can justify his big investment will depend largely on meeting planners, whose big groups are necessary to keep the resort full. To that end, the new owner is willing to woo potential guests himself. Walking the main hallway one afternoon, a staff member introduces Justice to two meeting planners who are considering bringing 480 guests to the resort this summer. "God bless you," Justice says, hugging each and inviting them to breakfast the next morning. There, over scrambled eggs, Justice asks how they've liked their stay. "I had an outdated perception—highbrow, stuffy, formal," says Scott Andrews, president of Ascent Performance Group. "I was pleasantly surprised." A few weeks later, the duo signed a $1 million deal to bring their group in June. To ensure the Greenbrier Resort is around for another century, Jim Justice will need to sign up a whole lot more just like them.