MARK AUSTIN THOMAS: When we think of the damage caused by Hurricane Katrina New Orleans comes to mind. But the state of Mississippi was hard hit as well. A 30-foot storm surge practically wiped the town of Waveland, Mississippi off the map. For days a rag-tag group of 150 survivors lived on the dry second floor of the Coast Inn and Suites in Waveland. Last year Marketplace's Dan Grech recounted their harrowing experience. Now he revisits the hotel, to see how its reconstruction is going.

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DAN GRECH: When I first met Bill Lady, the owner of the Coast Inn and Suites, he had just hit a new low.

BILL LADY: "Well, I'll tell you what, I never, ever, thought I would be as destitute as I am right now. Now all of sudden we're pushing grocery carts and we're exactly the same as everyone else. And it humbles you a little bit."

Lady lost two homes, his car wash and the bottom floor of his hotel to Katrina. 150 strangers were living on the hotel's second floor free of charge. As the days passed, TVs and mattresses went missing.

But then things seemed to turn around for Bill Lady. Within a week of the storm, he hired a company out of Texas to gut and rebuild the property in exchange for his insurance proceeds.

Rooms that had been soaked to the ceiling were soon stripped to the frame.

LADY: "Just what they've done in 10 days is amazing. It still isn't exciting to look at and certainly doesn't smell very good, but after they do the real cleaning and start rebuilding, it's going to be exciting. Anytime you see a positive change and some new business ideas, it gets your blood flowing."

Lady was told he could reopen by Christmas. His brother Jim even planned to open a pizzeria in the remodeled front building.

But then Lady's insurance company refused to pay for damage caused by storm surge. Soon the contractor stopped answering his calls.

LADY: "He pulled out. He made a lot of false promises. He did not live up to his agreement. So I was left at square one once again, and there was nothing I could really do until I settled with the insurance. And it just took 10 months."

Insurance eventually paid Lady $1.5 million. It would have taken three times as much to fully rebuild his hotel.

So Lady took another route.

LADY: "It was something to see it being torn down cause they really struggled. There was more steel and concrete than I've ever seen."

Lady tore out the front office, the pool and the southern wing of the building. He left 75 rooms standing and plans to operate a no-frills, blue-collar hotel.

LADY: "I just decided, there's so many workers that need rooms, that the direction I needed to go was to fill this hotel with working people."

Lady changed the name of his hotel from the Coast Inn and Suites to the Coast Inn.

The hotel still needs a lot of work. Its roof isn't finished, there are jagged holes in the front wall, and most of the rooms are bare, but earlier this month, with little fanfare, Bill Lady strung up a cheap plastic sign where the hotel placard had been.

It simply read "Now Open."

His first guests were the guys fixing his roof.

From Waveland, Mississippi, I'm Dan Grech for Marketplace.