Building resorts is only half of this company's story

When Bob Ryan started his resort development company 13 years ago, he chose a business model embraced by only a handful of Minnesota developers: He opted to stay on to manage resorts after construction was completed.

The management end of the business might be a low-margin option, he allowed, but it might have saved the company as the economy sank into deep recession in 2008-09.

"If I'd been on the development side only I'd probably be out of business now," said Ryan, 55, the founder and CEO of Duluth-based Odyssey Development Inc. A developer who doesn't follow suit "is giving up a significant long-term revenue stream."

The company manages four resorts it developed in northern Minnesota, a business that grossed $16.4 million in 2009 and is on track to approach $18 million this year, thanks largely to contracts awarded recently to manage two resorts built by other developers.

That makes Odyssey the largest of about a half-dozen developers that take projects from concept to construction to sales and marketing to long-term management, Ryan said.

Or, as he put it, it's a resort group with "1,800 pillows" -- room for 1,800 guests a night in 499 units.

The company sells off the condos, town homes and cabins it builds, but retains ownership of the main lodges, a source of continuing revenue with their restaurants, gift shops, meeting spaces and, in two cases, their own rental units.

Compared with the margins on sales of vacation homes, it's a low-return operation, Ryan said, "but the management side is a wonderful business to be in in these times."

Consider: In 2007, when vacation home sales were booming, Odyssey revenue soared to a record $26.1 million, just 45 percent from management income.

But as revenue tumbled nearly 40 percent in the ensuing two years, "the vast majority" of the $16.1 million gross in 2009 was generated by the management side of the business, Ryan said.

The combination of reliable management revenue and a conservative development approach means Odyssey not only survived the recession but came through without significant long-term debt.

The company builds its projects in stages, adding units as required and using short-term construction loans. And it didn't hurt that Odyssey hasn't started a project in the past 2 1/2 years.

Ryan, whose family's Grand Rapids-based Ryan Development Inc. once built northern Minnesota resorts and other properties, said he chose the long-term management model for another reason, however.

"As we realized at Ryan Development, an incompetent manager can make sales of a project's vacation properties difficult, can even bring them to a stop," he said. Survival in the worst economic downturn since the Great Depression turned out to be a welcome bonus.

The Odyssey resort lineup starts with the Caribou Highlands Lodge at Lutsen that had been owned by now-inactive Ryan Development and was taken over by Odyssey in 1997. The resort includes 30 lodge rooms, 84 condos and town homes and 18 detached "executive homes."

Other properties in the Odyssey lineup include:

•Grand Superior Lodge north of Two Harbors, a 1997 project with a 25-room lodge and 28 cabins or town houses. It all adds up to 90 units available because Odyssey designed the two-to-four-bedroom vacation homes at all of its resorts so each bedroom could be rented as a separate unit.

•Trapper's Landing, built in 2007 on Leech Lake near Walker, includes two cabins and 12 town houses that work out to 41 rental units.

•Since November, Odyssey also has taken over management of East Bay Suites, a 31-unit condo project in Grand Marais, and Beacon Pointe with 38 units in Duluth.

Year-round offerings

The largest share of the more than 61,000 Odyssey guests each year show up during Minnesota's road-construction season, enjoying a lengthy roster of entertainment that includes guided kayak trips and hikes along the Lake Superior shore, crafts activities for the kids and lakeside bonfires and a bit of star-gazing before bedtime.

Not to mention an annual "Wine and Culinary Weekend" at one of the properties, a yearly fishing tournament at another and guided fishing at a third. If one of the resorts lacks an activity a guest desires, Odyssey provides shuttle services to another of its properties that does offer it.

We Minnesotans are a hearty bunch, don't you know.