Vail Resorts unloads Marriott for $62 million | VailDaily.com
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Vail Resorts unloads Marriott for $62 million

Cliff Thompson

AVON As had been hinted in previous months, Vail Resorts announced Monday the sale of the 345-room Vail Marriott in Lionshead for $62 million.It was purchased by DiamondRock Hospitality, a Bethesda, Md.-based investment company that owns Marriotts and other hotels across the country. The sale is expected to close next month.Vail Resorts purchased the property and two nearby vacant lots in December, 2001 for $49 million. It will manage the hotel through 2020 and the hotel will retain the Marriott name and affiliation.The two lots the west day parking lot and the site of the Gore Creek Townhomes, now under construction are not included in the sale and will be developed by Vail Resorts.Hotels have been hot sellers, as chief executive Adam Aron pointed out when he gave companys second quarter earnings report in March. He hinted broadly that the company would likely sell a resort hotel. It owns a number of slopeside hotels as well as the 10 hotel RockResorts, of which the Marriott is a part.With this price tag, Vail Resorts is thrilled with this sale of the Vail Marriott, Aron said. We will retain management of the hotel for at least 15 years, at the same time being able to implement our strategy of capitalizing on current robust hotel market valuations.Busy lodging businessLast month Vail Resorts purchased the remaining ownership of the 88-room Snake River Lodge in Jackson, Wyo. and it also announced it will manage the 56-room Lodge at Cordillera. In December the company sold its 49 percent of the Ritz-Carlton Bachelor Gulch The sale price of the Marriott equates into approximately $180,000 a room, the companys press release indicated.Just a year before the company purchased it, a new wing of the hotel, under construction, was heavily damaged by a construction-related fire. That multi-million dollar expense was covered by insurance. After acquisition, Vail Resorts remodeled the entire hotel.Vail Resorts is on a record run this year. Its second quarter earnings released in March show the company earned $32.2 million on $264.6 million revenue. All three of the companys divisions mountain, lodging and real estate were profitable.The companys guidance, or prediction of pre-tax profit, is calling for a record $152 million to $160 million in the mountain operations and lodging division, and $10 million to $16 million in pre-tax profits for the real estate division. The stock market reacted favorably to the news of the sale and Vail Resorts stock closed at $26.25 a share up 2.6 percent.The stock Monday was carrying a price/earnings ratio of 35.5 high by industry standards meaning it is more speculative than, say, the Standard & Poors 500, which carries an average price earnings ratio of 20, said Richard Loth, an investment advisor and columnist for the Vail Daily.The reverse of the price/earnings shows the stock is providing investors with a return of 2.6 percent about that of a no-risk, FDIC-insured certificate of deposit, Loth said.Vail Resorts has not paid a dividend since initial public offering in 1997.Staff Writer Cliff Thompson can be reached at 949-0555, ext. 450, or cthompson@vaildaily.com.Vail Colorado


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