Honey Creek must erase red ink soon

The state of Iowa's drive to establish its Honey Creek Resort on Rathbun Lake as a top tourist destination has been anything but a day at the beach.

The $58 million resort, built mostly with $33.5 million in state-backed bonds, opened in the fall of 2007. It boasts a 105-room lodge, an indoor water park, 28 luxury cabins, 20 RV camp sites, an 18-hole golf course and other amenities. It's managed by a private company, Minnesota-based Central Group.

But one big feature it lacks is financial success. Honey Creek lost nearly $900,000 in its first 10 months of operation, according to an independent audit. And an enterprise that was supposed to be financially self-sufficient instead had to ask state lawmakers this year to put scarce state conservation dollars toward paying its debts.

That's not sitting well with lawmakers and others who have gone from being skeptical about the resort's chances for success to being troubled by its failings. Some have even suggested selling the resort and cutting the state's loses.

We share concerns about its future, but we think it's too soon to pull the plug on Honey Creek.

The state's decision to build a resort in a place that had failed to draw much private sector interest may have been misguided. But for now, let's look ahead and try to make it work.

Multiple factors worked against early success. A poor economy hit the hospitality industry especially hard as Americans cut back on discretionary spending. That downturn was not factored into the resort's operating objectives, which turned out to be too ambitious.

And the rush to start bringing in revenue meant opening the resort before all of its features and amenities were completed. Guests who came to Honey Creek last summer found that the beach, boat ramp, playground, bike trails and 18-hole golf course were not completed. Parts of the resort still had an under-construction feel.

It's also important not to lose sight of why Honey Creek was built in the first place: to spark some economic development in south central Iowa. It's a region that's in clear need of a boost, which Honey Creek still may provide once it's running at full power in better economic conditions.

We'd also like to see a more aggressive effort to market the resort to potential customers. Some critics of Honey Creek have complained that management is not doing enough to tell its story, especially to Iowans who own it.

But our patience with this experiment is limited. Clearly, 2010 will be a critical year in the life of Honey Creek. If red ink continues to flow steadily, the state may want to consider its options for getting out of the resort business. We have too many other parks and conservation areas vying for scarce dollars to justify a long-term resort bailout.