St. Regis Aspen on selling block
ASPEN, Colorado The St. Regis Aspen Resort is up for sale.The impending sale of the 280,000-square-foot hotel was confirmed by St. Regis Aspen General Manager Senih Geray on Monday.Last week, Geray informed the 200-plus employees at the property that its owner, Starwood Hotels & Resorts Worldwide, Inc., plans to sell the hotel it has owned and managed for about a decade.It is definitely Starwoods intention to sell the St. Regis, he said Monday, adding that other hotels in the region owned by Starwood also will be for sale in the coming months.I think the goal is to own one or two properties under each brand in North America, Geray said of the nine different brands owned by the company.Geray declined to identify which properties will be shed by Starwood, saying it is up to the general manager at each property whether to tell employees about the upcoming changes. He said he felt there would be no downside in telling Aspen employees about the sale and wanted to head off any rumors that might be created.In his letter to employees, Geray said the sale is subject to a long-term management agreement with Starwood Hotels & Resorts Worldwide, Inc., to continue operating it under the St. Regis brand, and that an ownership change wont impact the day-to-day operations of the resort.Right now, were looking at a 20-year management agreement, Geray told The Aspen Times on Monday.One condition of the sale will be that the new owner invest capital as part of whats known as a property improvement plan, which allows the property to maintain or exceed its current competitive position. The hotel has 179 guest rooms and suites, conference space, ballrooms, a restaurant, bar, lounge, lobby and retail areas, as well as a parking garage.Because Starwood Hotels & Resorts Worldwide, Inc., operates 925 properties around the globe, 74 of which are owned by the company, Geray acknowledged that getting adequate operating capital can be a challenge.Sometimes you have to get in line to get what you need, Geray said. Im hoping with a change of hands we would get some capital.Relieving itself of owned properties has been a company business strategy for a few years. The company sold a total of 51 hotels in 2006 and 2007 for about $4.6 billion, according to the companys annual report filed with the Securities and Exchange Commission in February.As a result, our primary business objective is to maximize earnings and cash flow by increasing the number of our hotel management contracts and franchise agreements …, the report states. The business strategy also includes disposing of non-core hotels [including hotels where the return on invested capital is not adequate] and trophy assets that may be sold at significant premiums.Whether the St. Regis Aspen is a trophy property is unknown. However, Geray said the Aspen hotel operates at a profit.If you look at our [profit and loss] records, our profit margins are a good catch for a buyer, he said. In our case, we have a relatively good balance between group and leisure business.Geray said Starwood Hotels & Resorts Worldwide, Inc., doesnt have a potential buyer, and that the Aspen property would likely be listed within 30 to 45 days.I dont know what the asking price is … but Im sure it wont be cheap, he said. It depends on the interest levels.Interest could be dampened by attaching a long-term management agreement to the sale and requiring a new owner to infuse capital, said one industry observer. Hotel owners typically have strong opinions about how a property should be run, said another source familiar with the hotel business and the Aspen property, and retaining Starwood to manage the St. Regis Aspen may be too much baggage to carry. The sources asked not to be identified.A difference of opinion in how the hotel should be managed was the source of contention between the propertys original owners, Saudi Arabian businessman Sheik Abdul Aziz Bin Ibrahim Al Ibrahim and the Ritz-Carlton. Not pleased with how the Ritz-Carlton operated the hotel, Al Ibrahims ownership took over the operations. Once that happened, the Ritz-Carlton left the property in the middle of the night on Aug. 2, 1997, stripping the hotel of a brand and leaving its employees in limbo.ITT Sheraton was brought in to temporarily operate the hotel. Soon thereafter, Starwood Hotels & Resorts Worldwide, Inc. acquired ITT Sheraton and the property, and turned the Aspen hotel into a St. Regis.A sale of the St. Regis Aspen would further Starwoods transformation from a real estate company with some hotel brands to a consumer lifestyle company with a branded hotel portfolio. A sale also would likely increase Starwoods growth rates and return on capital, diminish the impact of cyclical fluctuations in todays volatile real estate market, reduce overhead costs and strengthen balance sheets to return value to its shareholders.That was the direction from the CEO [Fritz Van Paasschen] … to get out from under the real estate and get more into the hospitality lifestyle business, and convert the assets from owned to managed properties, Geray said.Starwood Hotels & Resorts Worldwide, Inc., is a hospitality ownership, management and franchise organization based in White Plains, N.Y. One of the worlds largest hotel companies, it owns, operates, franchises and manages hotels, resorts, spas, residences and vacation ownership properties, including brands like Westin, Le Mridien and Sheraton. As of Feb. 25, 2008, the firm owned, managed or franchised 925 hotels in more than 95 countries with about 282,000 rooms worldwide.The Aspen hotel was built as a Ritz-Carlton in 1992. Its development triggered a legendary battle in the community in the late 1980s and early 1990s over the building’s size and scale. In 2004, as the St. Regis, the hotel converted 98 rooms in its east wing to 25 fractional ownership suites. Because they have multiple owners that are different from the hotel owner, the fractionals are treated as separate units and are not part of the sale. Geray said Starwood Vacation Ownership, Inc., would continue to manage those units after a sale.Geray said he expects an owners representative to be on site after an acquisition, but if a management agreement is in place, the hotels ownership would have minimal power to change the operation. That message was carried into Gerays letter last week to employees: So this could only be a positive change when it happens, and most likely not much will happen until spring, considering the economic conditions of todays real estate firstname.lastname@example.org
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