Closing may be temporary as downsized Heidel House is eyed

GREEN LAKE — There are other places to stay on the state’s deepest, natural inland lake.

They include the 17-room Bayview Motel & Marina on Dartford Bay, which is open year-round and offers pontoon boat rentals when the 7,920-acre, 236-foot-deep lake teeming with lake trout isn’t sheathed in ice and snow.

Angel Inn Bed & Breakfast is in a 1910 Greek revival, Green Lake Suites has 12 rooms in this city’s downtown, and there is a trio of quaint cottages at Terrace Beach Retreat that sit on part of what was Sunnyside Farm, established in 1870 by Civil War Gen. John McDonald.

But Heidel House Resort & Spa is the heart of this resort community about 70 miles northeast of Madison and a picturesque 85-minute drive. So when it was announced on March 1 that the historic property would close on May 20, it sent shock waves through this city of 960 people, created a negative buzz for the state’s otherwise thriving tourism industry and made news around the country.

“How can it not impact this little resort town,” said Jeff Shadick, a real estate agent with an office in the city’s downtown and who specializes in lakefront property. “Heidel House has been a mainstay forever but we’re hoping someone steps in.”

The lakeside portion of the resort sprawls across 18 acres and includes 1,100 feet of lake shore, multiple buildings, 165 rooms and suites, 15,000 square feet of meeting space, three restaurants, an outdoor pool and an area for outdoor weddings. The Escapade, a 60-foot catamaran-style yacht, custom-built for the resort and launched in 1995, offers sightseeing tours and special-event cruises.

Across the street, the resort has 20 more acres that is home to Evensong Spa. Opening in 2006, its services include body scrubs and other treatments that can contain Kentucky bourbon, fruit extracts, lavender and spirulina algae mixed with organic ginger oil. A cafe, open only to spa guests, overlooks the adjacent Tuscumbia Country Club.

But over the past 10 years, the properties, owned by Madison-based Fiore Companies, have failed to make a profit. There have been attempts to sell but so far, no buyers have pulled the trigger. Stacy Nemeth, chief operating officer for Fiore, said the decision to close the resort “was incredibly brutal” but the hope is that the property will reopen on a smaller scale, more in line with a boutique hotel. What that ultimately will look like for Heidel House is unknown.

“I think that is definitely the only realistic opportunity, to downsize it,” Nemeth said last week. “Over the next few months we’ll be working very diligently on what the next phase is and working with the city of Green Lake to look at what’s best for the community. In the next few months we’ll have a better handle on what the future looks like.”

The roots of Heidel House began in 1890 as a 12-acre private estate for the Kelly family, who had built a house, stable, tack house and pump house. This was after David Greenway, in 1867, built the nearby Oakwood Lodge, believed to be the first summer resort west of Niagara Falls. The community was known then as Dartford until 1907 and had several other resorts that rented cottages to visitors who traveled by train from the East Coast, Chicago and even New Orleans. The resorts, now long gone, had names like Maplewood, Spring Grove, Sherwood Forest and Pleasant Point.

The Kelly estate was converted to lodging in 1945 when newspaper publisher Herb Heidel and his wife, Lucille, a teacher, purchased the residence for $20,000. Over the years, the property was expanded and became one of the go-to resorts in the Midwest. It also includes the Grey Rock restaurant, located in a converted two-story home with a spiral staircase built in 1949 by a Chicago meat packing executive and purchased by Heidel House in 1975.

In the summer months, travelers would come here to fish, water ski or simply relax along the shoreline. In the 1970s, the resort offered hot air balloon rides at sunrise and sunset while in the winter, it drew cross-country skiers and ice boaters. In 1980, the resort was given a four-star rating by AAA.

“Since its opening, it’s been an attraction,” said Larry Behlen, 68, a city historian who has lived in the community for most of his adult life and is a former mayor. “It’s been an economic driver for the community.”

But the early 1980s were not kind to the resort as the nation was in the midst of a recession. In 1984, Heidel House filed for Chapter 11 bankruptcy and owed creditors more than $2 million. In late 1985, the property, then with just 96 rooms, was purchased for $2.6 million by Margaret and David York, of Sheboygan, and Fiore Companies. Several upgrades were made after the purchase including the addition of 5,000 square feet of conference space in the early 2000s.

Changes in travel patterns over the past 20 years, however, have left the resort in the wake of massive indoor water parks in Wisconsin Dells that are surrounded by endless attractions, spas, a casino and scores of restaurants. Green Lake is also more isolated than the Dells and farther from Chicago than the resorts of the Lake Geneva area, said Nemeth.

Milwaukee-based Marcus Hotels & Resorts has been managing the property since 2014 but stopped taking reservations for weddings just under a year ago. The resort employs about 100 people, and Fiore made the decision last month to close the resort.

“The market has changed so much and the hotel didn’t meet what the expectations of today’s traveler really is,” Nemeth said. “The traveling public has really changed.”

The lakeside property is assessed at about $8 million, while the spa parcel is assessed at $2.6 million. There is also a boathouse on Strauss Avenue assessed at $756,000, according to City Clerk Barbara L. Dugenske. In 2018, the city collected $247,990 in room tax revenue, a number that will certainly decrease and impact the coffers of the Green Lake Area Chamber of Commerce, which receives the majority of the revenue from the 7 percent room tax. Liane Walsh, the chamber’s executive director, declined to comment and instead provided a statement from her board of directors.

“We don’t know the exact impact this news will have on the community, but we do have great faith everyone in our community will pull together to take very good care of the many families who have been making Green Lake their vacation destination for years,” the statement said.

Jon McConnell, whose family has been in the area since 1852, is a lifelong resident of the community and since 2014 has been the city’s mayor. He’s hopeful that tourism will remain a part of the Heidel House property and is optimistic about its future.

“Early panic is normal but I don’t know if it’s really deserved,” McConnell said. “Nobody has a crystal ball.”

One of the advantages for the resort is that it is surrounded by homes owned by people with deep pockets. Many are second homes, and last year Shadick sold a home for $3 million. He’s also been helping Fiore market the property to potential investors and developers but is hoping that the network of homeowners on the lake could ultimately lead to a buyer for the resort.

“There’s some well-heeled families on the lake and they’re all well connected,” Shadick said. “I’m hoping we can bring someone in because (if not) it’s really going to hurt the area.”

Source:  Madison.com