Without any warning to its employees, Sunterra Resorts closed its regional office in South Lake Tahoe, leaving its staff of 65, unemployed.
The company's telemarketing office in Reno was also shut down, placing an additional 68 people out of work.
"They were waiting for us on Friday morning and told us we had to pack up and clear out immediately," said Tom Comte, former marketing and community relations manager for the Tahoe region. "We were shocked because there was no forewarning at all. It was a very sad day for Sunterra in Lake Tahoe."
After reportings of a fourth quarter loss of $58.4 million and diluted loss per share of $1.63 in the quarter ending Dec. 31, 1999, the company is blaming its cutbacks on mortgage payments it did not receive from some customers who had an interest in properties around the nation. This loss resulted in a $43 million after-tax charge in mortgages receivable.
For the year, Sunterra reported a net loss of $17.4 million and diluted loss per share of 48 cents.
According to Keith Brown, vice president of corporate development in Orlando, Fla., Sunterra will be reducing staff size, postponing construction of its new headquarters and the termination of several acquisitions.
"We never had what we considered a regional center in Lake Tahoe," Brown said. "We opened the Round Hill office in 1999 to sell our Ridge Point property and now we are almost out of inventory (in that area). We wanted a center at the bottom of the mountain so our customers wouldn't have to deal with bad winter conditions."
Brown emphasized the company has no plans of closing its center at the Embassy Vacation Resort, but rather will concentrate its efforts more on that particular property.
"If we would have done this piece-meal and told people we were closing they would have left immediately and then we would have had no one to operate the center in its last few weeks," Brown said. "We have closed other centers down around the country in a similar way and we had to stay in consort with that policy."
Even though he was asked to remain on staff, general manager Lawdy Flanagan resigned in protest of the way his employees were fired.
"Lawdy was a hero to all of his employees and did the ultimate thing as a manager," Comte said.
Some employees had been with Sunterra for many years and most had left former positions because of the supposedly bright future the company had in the Tahoe area. Although some staff will get severance pay, at the end of the month all health and medical benefits will be terminated.
"There will be a lot of talented people out there flooding the market," Comte said. "It's at least a good opportunity to try something new."
Duane Wallace, executive director of the South Lake Tahoe Chamber of Commerce was dismayed so many valuable employees could be released without prior notice.
"It's a terrible thing to have happen to any family, however given our low unemployment rate, there is good opportunity for those Sunterra people to be picked up by other employers in the community," Wallace said.
Larry Lee Nufer, an off premise consultant for Sunterra who operated a booth inside Harrah's Lake Tahoe, thought something was wrong these last few months.
"They kept taking things away from us like transportation for ridge tours and gift packages to our guests," Nufer said.
Nufer was one of the few employees who was not fired, but rather transferred over to the Embassy Vacation Resort property, where he will retain a similar occupation.
