In 2008 Barbara Zimonja was at the top of her game. She was inducted into the David Eccles School of Business Hall of Fame and she was President and CEO of Premier Resorts International, a property management firm that handled 2,500 units in nine states. In Park City, where her company was headquartered, she sat on numerous community boards and was known as a generous employer who had built a small cleaning company into one of the area’s biggest and most respected lodging firms.
By the end of 2009 her business was in ruins.
Since Premier Resorts of Utah was forced into involuntary bankruptcy, she says that she has lost everything, including 50 pounds on a five-foot, one-inch frame.
On her darkest days, Zimonja says she blames herself for the entire catastrophe in which as many as 2,000 employees across the country (600 to 700 in Park City) lost their jobs, hundreds of property owners went unpaid and her family lost all of the money they had invested in her success.
On better days, she sees that her demise was caused by a perfect storm of financial crises, some of which she could, and perhaps should have, avoided and others that were beyond her control.
For the last year she has been largely silent about the events leading up to the demise of Deer Valley Lodging and Premier International, partly on the advice of attorneys and partly because each time she tried to explain what had happened she was overcome with emotion. But now she says she has “come full circle” is ready to talk about how she has been coping since closing the business that took 30 years to build.
Perfect storm begins to gather force
When the first signs of trouble bleeped across her radar screen, the president of Premier Resorts International reminded herself that she had weathered tough times before. Barbara Zimonja had no doubt that she could safely steer her business through the recession.
“Of course I was very concerned but I never, ever, ever, envisioned I would fail. It just wasn’t in the cards for me that I would fail, that the business would fail,” she said, of national economic crisis that erupted in the fall of 2008.
In October, Zimonja received word that she was to be inducted into the David Eccles School of Business Hall of Fame for her work mentoring students at the university and her career was on an upward trajectory. In hindsight, though, Zimonja admits there were warnings that the upcoming winter, her most profitable season, was going to be slower than normal.
Zimonja’s numerous accolades (she had also been named the Ernst and Young Entrepreneur of the Year in 2006) all recounted her rise from cleaning lady to CEO. As Zimonja tells the story, she moved to Park, City in 1976 and started a small cleaning company with two friends in 1978. The friends moved on but she stayed, adding properties and eventually buying Deer Valley Lodging for its debt. The company at the time was known as Park City Resort Lodging which was ultimately merged Deer Valley Lodging.
Throughout the 1980s there were indications that Park City was a rising star on the destination resort scene but it wasn’t a smooth trajectory. According to Zimonja, “I had some real rough times. One year it didn’t snow until Valentine’s Day.
“I had a year in the 80s when I couldn’t pay the owners so I was upfront with them just like I was this time and said, ‘Hey it’s a lousy year and we didn’t make any income but I’ll pay you back.’ And I did, by the next season.”
After a few more economic hiccups, though, Park City, and especially Deer Valley, began to grow exponentially and Deer Valley Lodging was poised to benefit. In fact, the company’s success was noted overseas.
One day, Zimonja says, a man representing British Electric Traction, a large conglomerate based in London, knocked on the door, “literally,” and offered to buy the business. By June of 1994 the deal was done with Zimonja running the Utah Division of BET’s new enterprise, Premier Resorts International.
The sale allowed Zimonja the luxury of contemplating an early retirement. “I was pretty jazzed about it,” she remembers.
But a cloud appeared. In 1997, BET submitted to a hostile takeover by another United Kingdom conglomerate, Renokil Initial. The new owners offered Zimonja a carrot, offering to promote her to president of all of Premier’s holdings which included ski and golf resort properties in Lake Tahoe, Vail, Sun Valley and Maui, among others.
Apparently, it was a challenge that Zimonja could not refuse.
Rentokil’s business practices, though, did not jibe with Zimonja’s. She was required to travel to London every quarter to justify her budget an she quickly learned that there was very little sympathy on the opposite side of the table for employees or for the fickle nature of tourism and property management. “It was a horrible way to do business Finally I just refused to go.”
After battling with Rentokil over the downturns caused first by the terrorist attacks in September of 2001, and then the disruptions surrounding the 2002 Winter Olympics, Zimonja began to look at buying the business back.
Finally, in 2004, Zimonja and Brad Goulding, who had been chosen by BET to serve as her CFO, bought the company back.
Back in control, business continues to grow
Under their leadership, Premier continued to grow, picking up properties in Florida and South Carolina. At that point they were working in nine states and managed about 7,500 rooms surrounding some of the country’s most upscale resorts. Zimonja recalls that Goulding then suggested they should begin developing their own assets, and she agreed. “I thought it sounded like a fabulous idea.”
In retrospect it was not.
With the financial seas still calm (but not for long) Premier purchased land and entered into an agreement with a developer in North Myrtle Beach, South Carolina. The plan was to build a marina, a conference center and an office building.
“Everything felt good. It was a good deal. We knew the developer well, etcetera, but the economy began to fail and, therefore, the relationship with the developer began to fail, the relationship with our bankers failed, so that all of a sudden we find ourselves with these assets that the banks can’t lend on and we have 60 acres of raw land that is worth half its value, maybe. We are under water.”
In hindsight, Zimonja admits it was foolhardy to begin building before the loans for the development were secured and she wishes she had been more adamant in suggesting that they halt the project when the economy first began to tumble.
“We were coming off the high. Real estate was gong strong and we had to move fast to get some of this developed. Lots of condos were going up and the banks were all vying for our business.”
That was before the subprime mortgage crisis and stock market crash of 2008 changed everything. The booming real estate market froze and advance reservations for the coming ski season fell off a cliff. The revenues that Zimonja and Goulding were counting on to pay employees and owners around the country failed to materialize.
The shortfall was particularly evident in Utah where property management firms are not required to hold reservation deposits in trust or escrow accounts as they are in some other states. According to Zimonja, in Utah the company was legally allowed to use those funds at their discretion.
“We most certainly were doing intercompany loans. I think that is public knowledge. There is no impropriety with doing that at all, we were using business funds to fund the business.”
That infuriated Premier’s Utah property owners who accused Zimonja and Goulding of using their rental fees to build up the assets in South Carolina. In retrospect, Zimonja admits, “We did that, it was not my decision and we shouldn’t have.” But she claims the Utah monies were used to keep the business in Park City operating. “Most of the money that went into South Carolina was mine and that is where I lost my retirement, my nest egg, my everything.”
As 2008 came to a close, Premier’s crisis mirrored the national economic implosion. Banks that had been cheerleaders for the Myrtle Beach project turned their backs, and Zimonja began trying to cut expenses at all of the property management offices. Revenues for the coming season, she says, were down 40 percent and the banks that had once been so eager to offer loans were unable to help.
Involuntary bankruptcy capsizes the boat
But up until February of 2009, Zimonja adamantly believed the business could be saved. She proposed drastic cutbacks but her plans drew stiff opposition, especially among Deer Valley property owners.
“I got a lot of flak about it. People said ‘we’ll never have customers again. You’ll destroy our complex.’ In Deer Valley it is very different because there is an expectation of what the guest will receive. When they are paying $1,000 a night the economies of scale just kind of flew out the window so our margins were much less than they were in our other operations.”
In March, Zimonja realized the company would be unable to pay the owners their share of the winter’s rentals. Nevertheless, she still held onto a shred of hope. After all, she had been through tough times before.
“We informed the condo owners that we were unable to pay but we were working on many alternatives to get funding into the business. I was hopeful we could get one of the many businesses we talked with to partner or buy us out. There was good momentum and a plan to pay the owners over time. I was very hopeful in those days,” said Zimonja.
But that last lifeline was severed in April when a group of condo owners, represented by Park City attorneys Joe Tesch and Joe Wrona, filed an involuntary bankruptcy against Premier Resorts of Utah.
“This destroyed us,” said Zimonja.
Word of the bankruptcy filing spread quickly among Premier’s other divisions triggering a panic that Zimonja credits with bringing down the rest of the company.
According to Zimonja, right after the filing, a bank in Colorado pulled Premier’s line of credit and withdrew money from a payroll account to close out their debts. “That created a panic that contributed to the destruction of our company,” she said.
The bankruptcy filing also scared away potential investors and buyers, leaving Premier no choice but to close up shop, she said. After one final attempt to save the assets in North Myrtle Beach from foreclosure, Zimonja was forced to admit defeat.
In October of 2009 Zimonja put the key in the door at Deer Valley Plaza for the last time and sank into a depression.
“It felt to me like everything came crashing down at once, even though, of course, when I look back at the timelines there were periods where light bulbs should have been going off. But instead, I was madly trying to save it.”
The worst part, she says, was not being able to pay her employees, some of whom had been with the company for many years. “That is the depth of despair for me,” she said.
Across the country Premier laid off 2,000 employees. In Park City nearly 700 lost their jobs. Many also lost their health insurance. Some were so angry that Zimonja worried about her safety.
“It was just awful,” she said, adding that letting down her employees had been her greatest fear. “This is my biggest regret. I wish that I had the money to pay it all. The people I worked with at Premier were the most important part of my business life. I feel a deep sense of loss and failure.”
Working through depositions and depression
Last winter Zimonja retreated from public life. “I couldn’t feel good about being with people. I was going through a lot of bad feelings about myself, beating myself up. All that self hatred turned into self pity.” She stopped eating and ended up in the hospital.
It was her significant other, Richard Pack, and her family, especially her 85-year old mother who pulled her through the darkest days, she says.
Today, Zimonja’s entrepreneurial spirit seems to be coming back to life. At 62 years old, her plans to retire by the age 50 are a distant memory. Her time is split between caring for her mother in San Diego and working though the bankruptcy. She knows that when she returns to work people will be in the wings waiting to garnish any income she might be able to generate. Still, she doesn’t rule out returning to work in the community that she loves, Park City.
Over the next few months Zimonja will continue to try to sell off personal and company assets to cover Premier’s debts. Her family helped to collateralize some of the investments in South Carolina and she hopes, one day, to be able to pay them back. Her business partner, she laments, was able to walk away without having made as many personal investments in the business.
Earlier this week, Zimonja was in Park City attending a forum with an association of business presidents. When asked if any of her colleagues had experienced anything like her ordeal over the past year she said that, sadly, more than half had lost or were in danger of losing their companies. “A large topic of discussion has been self doubt and failure,” she said.
As to the future, Zimonja imagines mentoring small businesses with a new set of hard-won lessons about success and failure, about ambition and restraint — and about starting over.