Sanibel Situation and Facts My

Sanibel

Situation and facts

My investors and I are in the process of developing a three-story beachfront hotel on Sanibel Island, a popular tourist destination off the western coast of Florida. Aside from beautiful weather and access to the Gulf of Mexico, Sanibel Island offers more than 400 different types of shells and an aggressively protected natural habitat for 267 species of birds. The residents of Sanibel Island are very protective of its environment, including its 4,700 acres of habitat and 11,000 acres of freshwater wetlands. As one might expect, this desire to protect the environment frequently presents challenges for the proprietors of Sanibel Island's booming tourist industry.

Since a causeway was constructed linking Sanibel Island to mainland Florida, the tourism business has grown significantly and is currently a major contributor to the Sanibel Island economy. This has raised concerns among residents that the pristine environment and many of the islands key aesthetic features could be compromised. As a result, several restrictions have been placed on the development of hotels and tourist attractions on the island. For example, new buildings can not exceed three stories in height, although such restrictions do not exist on similar Gulf islands, because residents do not want to obstruct island views. Also, buildings often must be constructed on stilts or with open first floors to minimize the risks of property damage in case the island experiences flooding.

State and federal laws also require that development cost Sanibel Island no net loss of wetlands, which are basically poorly-defined transitional areas between dry land and the ocean. So, if any construction occurs that results in a loss of wetlands, new wetlands must be recreated elsewhere on the island. In reality, local regulations are often stricter than federal and state requirements, so projects that result in a disturbance of wetlands are hardly guaranteed a green light from the island's residents. This is a common issue in Florida, as development that impacts wetlands often causes natural habitats for animals, insects and plants to be divided (Green swamp, No date). Recreating wetlands, of course, can not solve this problem.

Finally, the island's residents are very protective of their freshwater resources, which provide habitats for the island's various species and offer a source of fresh water for drinking and other uses for the island residents. Naturally, any project that could disturb or pollute these freshwater resources is going to receive a good deal of scrutiny from the Sanibel Island residents.

While my investors and I currently operate hotel properties on Sanibel Island, our latest planned hotel has raised some concerns among island environmentalists. While the hotel will meet the island's three-story limit and will include a large nature preserve with raised boardwalks so guests do not disturb the environment, other facets of the project are more troubling. First, I need to construct a walkway that will connect the hotel to the outdoor swimming pool, and this walkway will result in a slight loss of wetlands. The environmentalists oppose this loss of wetlands, but the hotel must have a swimming pool and it will be a major detriment to the hotel's operations if the main building and swimming pool are not connected. It would be a major inconvenience for guests if they could not easily access the pool.

Another point of contention for the environmentalists involves the parking lot and access road that must be built to guests can reach the hotel. While the hotel has 350 feet of road frontage, I will need to build a turn-off road for hotel access, and, naturally, a place for guests to park. Because the pavement is a non-porous surface, water will run off of the pavement and carry any pollutants the pavement collects with it. This pollution could eventually reach and contaminate the island's freshwater resources. As a result, the island environmentalists want me to construct barrier/retention ponds and a buffer zone of plants to keep the run-off from reaching Sanibel Island's freshwater resources. Although I believe the environmentalists are exaggerating the risk to their freshwater resources, I have already budgeted the money for such construction. The environmentalists do not know that I have already committed myself financially to this environmental initiative.

The Army Corps of Engineers, which is in charge of issuing permits for construction on the island, has arranged a meeting between the environmentalists and me so we can work through some of our issues. If I can win the environmentalists' support for the project, I will have taken a big step toward receiving a permit to build, which will be good news for my investors and I. With that said, if I make too many concessions to the environmentalists, it could negatively impact the projected financial performance of the hotel. The hotel is only projected to turn a profit of $25,000 the first year, although I have forecast that profits should increase substantially after that. At any rate, as a business owner it is my responsibility to project my margins, or, if possible, to even increase them.

Issues and Objectives common mistake in negotiating is failing to fully research and understand the other side's perspective (Bacal, No date). Therefore, I must make an effort to fully appreciate the environmentalists' issues, what their objectives may be during negotiations, and what tactics they may use to achieve their objectives. To restate, the Sanibel Island environmentalists' issues with my planned hotel development are as follows:

1) They are opposed to the walkway that would connect the hotel with the swimming pool, as the pavement would result in a loss of wetlands.

2) They are concerned that the parking lots and access roads that are being built will result in run-off that could pollute the island's freshwater resources.

A must bear in mind that these are not necessarily the only objections the environmentalists have -- they are simply the only objections of which I am currently aware. It is possible that the environmentalists could raise a host of issues ranging from pollution during the construction process to the types of materials that will be used. It is reasonable for me to expect that the environmentalists may not yet have shown all of their cards and that additional issues could surface at the negotiating table. but, for now, I will focus my preparation and strategy on the two issues that have been communicated to me.

My issues with the Sanibel Island environmental lobby are as follows:

1) I believe the three-story limit on building height is extreme, bad for business, and out of line with the policies of similar resort locations in Florida.

2) the risk to freshwater resources from runoff as a result of paving is, in my opinion, being overstated.

3) the objections to my plans to connect the hotel to the swimming pool are unreasonable. Any loss of wetlands will be replaced, as required by law, and if I do not connect the hotel to the pool it will adversely impact the desirability of my hotel to tourists.

The main objective of the environmentalists, I must assume, is to compel me to build as environmentally friendly a hotel as possible. As was mentioned, this would include requiring me to build a retention pond and buffer zone to protect freshwater resources from pavement runoff, and possibly forbidding me to build a walkway connecting the hotel to the swimming pool.

To compel me to act, the environmentalists could threaten to withhold support for the hotel construction. This, really, is a dramatic approach -- a nuclear option, if you will. Beyond that, the environmentalists may use a carrot-and-stick approach. The stick, obviously, is withholding support for construction. The carrots, which would be incentives to require me to act, could involve concessions on other issues, such as building height.

My objective is to win some concessions from the environmentalists that would maintain or enhance the profitability of the hotel. My chief responsibility is to protect the investment my investors and I have made in this project and to ensure a good return on that investment. I need to keep a slim first-year margin of $25,000 from disappearing, which could occur if I am forced to fund more expensive environmental initiatives. Although the hotel is projected to increase its profitability significantly after the first year, as business grows and debt service shrinks, those projections may not be met if key hotel features, such as a walkway connecting the hotel to the swimming pool, can not be developed.

While protecting margins is critical, I also will pursue opportunities to make the site more profitable. The chief way to enhance the profitability of the hotel is to increase the number of floors. If I can increase the hotel size from three to four floors, I have the opportunity to realize 33% more revenue. Also, because I have 450 feet of beach frontage, that is an entire additional floor of ocean-view rooms that I may be able to charge a premium for. So, while I need to protect myself from expensive environmental concessions, I must be willing to make some of those concessions in return for profit boosters, such as additional floors.

Strategy plan

I am heading into negotiations with the Sanibel Island environmentalists from a strong position, as I have very little to lose. I am already projecting a profit, even with some of the environmental remediation work factored into my projections, and the profit will grow substantially after the first year. If I get no concessions out of these negotiations, the hotel will still be profitable; if I get any concessions, that profit could increase exponentially. As Steven P. Cohen indicates, the party with little to lose and much to gain is in a position of power in the negotiating process, as he or she is able to take risks (Cohen, 1995).

The biggest concession I could win would be the ability to expand the hotel to at least four floors, while would greatly increase the hotel's profitability, so my negotiating strategy will focus on achieving that end result. From the environmentalists' perspective, the negotiations will be a success if I do not disturb wetlands when connecting the swimming pool to the hotel, and if I agree to build a buffer zone and retaining pond to mitigate any fresh water disturbance from the parking lot and road run-off. Fortunately, the set of circumstances surrounding this hotel's development provides us both opportunities to win.

I will present my offer first. As Lynne Waymon points out, this strategy allows me to take control of the negotiating process and shows me as a serious and interested party who is looking to make peace (Waymon, 2002). When I make my first offer, if I ask for four floors and the environmentalists say no, I have no room left to negotiate. Therefore, I will start negotiations by asking for six floors. My main arguments will be that the extra development will be good for tourism and the Sanibel Island economy without additional significant environmental impact. Further, it would bring Sanibel Island's building height restrictions into line with similar resort areas, which allow buildings well in excess of three stories.

To strengthen my case, I would point out to the environmentalists that I am a proven friend of the environment and of Sanibel Island. I have operated other properties on this island that have proven to be environmentally sensitive and have met the needs and requirements of the island's environmental lobby. Plus, if the environmentalists see me as a partner and not part of the problem, they are more likely to take offers from me seriously (Cohen, 1994). Sooner or later, I'd point out, there is going to be a hotel taller than three stories built on the island, and it behooves the residents to ensure that these properties are developed by friends.

Fortunately, the environmentalists do not know that I have already factored the costs of buffer zones and retention ponds into my cost projections. In return for supporting a six-story hotel, I will offer to construct the buffer zones and retention ponds to make the site truly environmentally friendly. If this tactic works, I will have secured extra floors for the hotel without having to give anything up. If the environmentalists object to anything taller than three floors, I have the option of withdrawing my commitment to constructing the barriers and retaining walls, which could save me money. Naturally, I would have to secure support from my investors for building six floors, but I am confident that they would be excited by the opportunity to increase profitability.

Hopefully, the environmentalists will want the buffer zones and retention ponds badly enough that they will be willing to negotiate. I suspect this might be the case, because the environmentalists must know that asking for the retention ponds and buffer zones is not as reasonable as raising the wetlands issue with the pool walkway. With the wetlands issue, the environmentalists have the weight of the law on their side -- I simply must replace any lost wetlands. With the retention ponds and buffer zones, the environmentalists are asking for accommodation on a potential pollution issue that may not even occur on the hotel property, and which might not be a genuinely quantifiable risk at all.