The Breakers Palm Beach commemorates its 125th anniversary on the Atlantic
Henry Morrison Flagler was a visionary, but even he probably could not have imagined what The Breakers, now a premier resort known worldwide, would become when he founded it 125 years ago.
Flagler, who made his fortune as a partner in the Standard Oil company and as a developer and railroad pioneer, opened the Palm Beach Inn on Jan. 16, 1896. It was the only oceanfront hotel south of Daytona Beach and attracted the famous people of its day including the Astors, Rockefellers, Carnegies and Vanderbilts.
Regular guests from his other nearby hotel, the 1,100-room Royal Poinciana, asked for rooms “down by the breakers.” When Flagler doubled the size of the inn for the 1901 season, he renamed the oceanfront resort The Breakers.
Today, as The Breakers celebrates its quasquicentennial throughout the year, it prevails as one of just 1,000 family-owned businesses in the United States that is more than 100 years old and still under its original ownership. Owned by the heirs of Flagler, who died in 1913 at 83, and his wife, Mary Lily Kenan, who died in 1917 at 50, it also is the only large, historic luxury hotel in America still in the same family.
“With all humility, the Kenans, the family, our board, our senior management team and most of us have been here 25 or more years,” said Paul Leone, CEO of The Breakers Palm Beach and its president since 1994. ”We have often said, ‘I think Henry Flagler would be proud.’ It would have been hard to impress him. He was so audacious. He was such a visionary. We were not only able to save this masterpiece but make it even better. That was not easy to do.
“His vision was for it to be one of the greatest resorts in the world, and for many years it was. But like any organization that has been around 125 years, it certainly goes through ups and downs.”
Leone, started working at The Breakers in 1985 as controller and serves as CEO of its parent company, Flagler System, Inc. “Our generation, starting with Jim Kenan and his cousins and siblings, our job was to put it back on top. That started, really, in 1994, and we have never let up since.”
Ever-evolving oceanfront resort
The Breakers has continued to evolve and reinvent itself, investing an average of $25 million a year in enhancements to its 140-acre oceanfront property. In addition to 538 guest rooms and suites, the property offers a private beach club with four pools, five whirlpool spas, 25 poolside bungalows and a variety of on-site watersports. Then there are two championship golf courses, one of which is 10 miles west; 10 Har-Tru tennis courts; a Forbes five-star spa; an indoor-outdoor fitness center; 14 boutiques; and a family entertainment center with children’s programs.
After closing March 18 because of the coronavirus pandemic, The Breakers re-opened on Memorial Day weekend. From Memorial Day weekend to Thanksgiving, occupancy ran at about 40 percent of a self-imposed cap of 400 rooms.
That cap was in force over the holidays, when many of the vacant rooms could have been sold, Leone said.
“It is about creating more space in this environment, even though we are not under any restrictions. The restrictions have been lifted in restaurants, but we have kept the indoor capacity at 50 percent. Our bars are not functioning as bars. You cannot stand at the bar and congregate. You can sit and dine at the bar. We continue to operate having that level of space and extra level of safety. It has been working,” Leone said.
Occupancy during the season typically runs at more than 90 percent, but Leone expects it to average 60 percent this year.
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“As we reopened in this most-challenging environment, and for the last nine months of that, our number one priority has been safety. We didn’t reopen to try and be heroes. We didn’t do it to try and make a quick buck. We did it because we thought it was the right thing,” Leone said.
Many people still wanted to travel and to travel safely to a place that they trust, Leone said.
Economic impact estimated at $1B
The Breakers’ economic impact on Palm Beach County is estimated at $1 billion a year, based on the classic multipliers, such as payroll and goods and services.
Jorge Pesquera, president CEO of Discover The Palm Beaches, the area’s official tourism agency, said Flagler and The Breakers’ have shaped Palm Beach County as a leisure destination.
“We actually include the trademarked statement, “Palm Beach is America’s First Resort Destination” in our new brand promise,” Pesquera said. “The reason we say that is because this was really kind of Disney-like thinking back in the late 1890s by a man who made a lot of money in grain in Ohio then made a lot of money in oil in New York and started a third career in the railroad and resort industry.”
“It is not just The Breakers, but what he did in Palm Beach that defines what the soul of our community is from its inception,” Pesquera said. “The Breakers has a particular knack for creating a spirit, an obsession about hospitality and service that is truly unique.”
Flagler built Florida’s first golf course in 1897 between the two hotels even though he thought the sport was a “passing fancy like Ping-Pong.” At the turn of the century that course was expanded from nine holes to 18 holes. The Breakers set the stage for Palm Beach County to become Florida’s golf capital with more than 160 courses.
During the pandemic, golf courses and tennis courts at The Breakers and other resorts have seen a 200 to 300 percent increase in participants because people want to be outside, Leone said.
Fine art, wall murals, flower beds and palms
The Breakers — with its palatial feel, fine art ceiling paintings and wall murals, colorful flower beds, palm trees and manicured landscaping and golf courses — has endured and been rebuilt twice. Fires destroyed it in 1903 and 1925. The first fire began during expansion renovations, and the second was blamed on a curling iron supposedly left on by the Chicago mayor’s wife.
The Breakers third incarnation, its current Italian Renaissance version, designed by architectural firm Schultze & Weaver, opened in 1926. The twin Belvedere towers building was inspired by the famed Villa Medici in Rome. The $7 million construction took 11 months and 14 days from groundbreaking to the first guest checking in.
During the deadly September 1928 hurricane, the hotel lost most of its barrel tile roof, its pier and its windows, but it opened just three weeks late for that winter’s season.
During World War II, The Breakers served as the U.S. Army’s Team General Hospital, complete with a maternity ward. From 1942 to 1944, more than a dozen babies, known as “Breakers Babies,” were born there.
Until 1969, The Breakers was strictly a winter resort, opening around mid-December and closing by mid-April. By 1971, it was open year-round.
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Amanda Skier, executive director of the Preservation Foundation of Palm Beach, said, “What makes The Breakers so iconic to Palm Beach is its exceptional architecture and authentic sense of place. Not only has the physical building been so beautifully preserved, but also the traditions intrinsic to the hotel’s original development.”
Leone said that at a January board meeting, the decision was made to continue ongoing improvements and renovations despite the pandemic’s impact on business.
“We learned a valuable lesson in the mid to late ‘80s. That is, you don’t want to fall behind on renovations and maintenance with a property of this magnitude, a property at this level of luxury. You can’t get behind,” Leone said. “Playing catchup is painful and costly to the brand and the business, but we did catch up.”
Leone said the resort’s strong balance sheet is based on the nautical mantra “rig for bad weather.”
“Maintain a margin of safety. Even in the best of times, do not let your guard down, so when things like this pandemic, the great recession and 9-11 hit, our balance sheet allows us to continue with our long-term plans,” Leone said.
“As much of a financial hit as we have taken over the last year, we never let up on our long-term plans,” Leone said.
New development
In January, the board approved a $30 million budget for the year ahead. It also talked about its new development on Via Flagler by The Breakers, an al fresco plaza with boutiques and eateries on Royal Poinciana Way, the town’s original main street. It acquired the former Testa’s Restaurant site for $20 million three years ago. The board is open to considering other opportunities like that in Palm Beach, Leone said.
“It has been a great collaboration with the Frisbie Group. I want to give them a nod. They did the heavy lifting, trying to get the zoning on that street,” Leone said. “Royal Poinciana Way had been in disrepair. It was very difficult. They made it happen, then we took over on the operating side.
“We think we can do more. Via Flagler right now is 75 percent leased up. We operate several of the spaces, Henry’s and Main Street, and other spaces are under lease. Within a few months it will be 100 percent leased up, then we will consider other projects,” Leone said.
‘State of being’
In pre-COVID-19 pandemic times, The Breakers has served as a center of commerce, holding an average of 10 conferences a week, averaging 75 attendees. Often, the groups were a list of Who’s Who in corporate America. It’s also a popular site for weddings, receptions, dinners, galas and other social events, with about 10 per week during the season, and throughout the year on weekends.
“It wouldn’t be a town without The Breakers,” said Laurel Baker, CEO of the Palm Beach Chamber of Commerce. ”… It was the catalyst and provided the dock that took people to Cuba. There is so much there. It is not just a hotel. It is a state of being.”
Baker said The Breakers’ upgrades, renovations and community support have been stellar, with major projects every year. She attributes its success to the Kenan family and the leadership they have given to those outside the family along with the staff’s professionalism and attention to detail.
Architecture, beauty and history
Mayor Gail Coniglio considers The Breakers the Grand Dame of Palm Beach and said the resort is recognized around the world for its architecture, beauty and history.
“Their commitment to excellence is evident in its Five-Star service, extraordinary milestone memories and charitable events,” Coniglio said. “The Breakers Hotel family continues its mission of long-standing community investment, by improving the hotel property, dining and cultural enhancements and amenities with a dedicated focus on philanthropy.”
Leone said that the “secret sauce” isn’t as much about the training the employees receive as it is about hiring the right people.
“We torture ourselves actually, to find the right people in the first place. In a typical year, my human resources team, which is probably five times the size of the normal team, will screen 15,000 applicants. Of those, only 5,000 applications will ever make it to an interview, and only 500 will get hired.,” he said.
The number of employees stands at 1,600, down from a high of 2,200 pre-pandemic.
“It is about finding that person that naturally loves to serve other people,” Leone said. “They have the energy and positive attitude. They are team players, and they are talented.
Pandemic can’t stop the celebration
While the COVID-19 pandemic has changed how the anniversary is being celebrated, it hasn’t stopped it.
“The main adaptation is, whether it is for our team or our guests, we are not having any large congregations. We probably would have done some major events,” Leone said. “It has really been more of bringing attention to it from a marketing standpoint, digital media, gifts to our guests and specials in our restaurants.
For more information about the anniversary, visit thebreakers.com/125.
Looking forward, Leone said the model of modernization and preservation undertaken over the last 25 years has worked, and he expects that to continue.
While the main hotel is original, the facilities added since its beginning include the spa, the beach club, bungalows, golf and tennis clubhouses and the palm court retail area.
Projects over the last year or so have included $13 million in room renovations, several million dollars in infrastructure projects and several million dollars in function space improvements.
Looking forward, Leone said the model of modernization and preservation with hundreds of millions invested over the last 25 years has worked and he expects that to continue.
“We are doing it at a level that no one in our competitive class can keep up with. It is probably three or four times the norm. How can you actually sustain it? It works. This isn’t a charity, this is a business, and we have to achieve a return on investments. As large as those investments have been, we have been able to make it work..
“This balance has been very successful, preservation and modernization in harmony. I have seen historic properties around the country that did not do it in harmony,” Leone said. “I was very sensitive to that. You cannot just attach something to this property that doesn’t fit, like an appendage. It is a delicate balance. We have been able to strike it.”
Leone, who has worked with the second, third and fourth generations of the Kenan family, said the family has no interest in ever selling the property. Only 4% of family businesses ever make it to the fourth generation.
“Every day we come to work, and for the next generation of the Kenans, we have this huge responsibility to keep that streak alive. That drives us. It is such a great legacy,” Leone said. “We are so encouraged by the next generation. They are starting to get more and more engaged in the governance side of the business, not in the management side. They have such an appreciation for this business.”
It appears the pandemic has many months still ahead, and, of course, that will continue to impact the bottom line.
“We are not letting up one bit. We are not taking anything for granted. We are keeping our standards higher. I hope we can all make it safely to the end of this thing,” Leone said.
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