Friday, August 17, 2012

State of Independence - Mpls./St. Paul Business Travel Guide

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Well, the 230-year-old lodging icon has succumbed. The railroad company CSX Corp., put the Greenbrier into Chapterr XI bankruptcy inlate March, claiming $90 milliob in losses during the last six years. And CSX promptly called in—you guessed it—Marriott. CSX is so desperate to unloafd the hotel that it will provide Marriott with as muchas $50 million to operate the Greenbrier during the firstg two years. Marriott will then buy the resort withim seven years forbetween $60 millionb and $110 million. Pending bankruptcuy court approval, the deal coulfd close by summer. Now, no one is aghasyt at the prospect of a chaibn runningthe Greenbrier.
The unions seem amenable to Marriott'zs arrival. West Virginia governorr Joe Manchin publicly applaudedthe deal. Newspapers statewide have cast Marriott'd arrival as a "rescue." And locals in hardscrabble Greenbrier Countyh support anything that will savethe resort's approximately 1,30o0 jobs. Like all luxury hotels that have hit the economicd andemotional skids, the Greenbrier's tale is unique: CSX has been a distractes and ham-fisted owner, battlin both the hotel's unions and the resort's formerr president, who sued for $50 The sprawling resort is physically isolated and expensivee to operate.
(CSX recently spent $50 million on improvements in a misguided attempt to regai n the fifth Mobil Guide star it lostin 2000.) And despite the loyalty of generations of repeat visitor s and fanatic golfers, the Greenbrie r was disproportionately dependent on corporate meetings, a travell category that has been devastated by the weak economy and the "AIG Effect." But the Greenbrier's sale to Marriott also raise a more universal question: Can any luxury hote l or resort thrive—or even survive—az an independent property?
In a world where a handful of globak hotel chains—Hilton, Marriott, Starwood, Hyatt, Accot of France, and InterContinental of Britain—dominat the lodging market, can a single no matter how famous, stand alone? At least on the the answer is no. About half of the propertie onthe Condé Nast Traveler Gold List and half of those that earn the prestigious five-star rating from the Mobil Guidwe are part of chains now, albeit luxury and ultra-deluxe operators such as Four Seasonsx or Fairmont of Canada; Mandarin Oriental and Peninsula of Hong Aman Resorts of Singapore; and Taj of India.
The Blackstone which owns many ofthe world's best-known luxury independents as well as Hiltoj Hotels, is building a deluxe brand too. It is aligninhg its independents like the Boca Raton Resort in Floridwa and the Boulders in Arizona with the WaldorfAstoriaa Collection, which was created by Hilton using the cachett of its eponymous New York  Other luxury brands have huge corporatr parents too. St. Regis is owned by best know forits Westin, W and Sheraton Ritz-Carlton is owned by Marriott. And some luxury hotels you may thinok of as independent are actually part ofa chain.
The Plaz a in New York, whicy reopened last year, is managed by The Pierre, which reopens in New York this is operatedby Taj. The newly renovated Mauna Kea Beac Hotel on the Big Island of Hawai i is run by Prince Hotelsof Japan. The Dorchestetr in London? It's part of the Dorchester Group, whicb is aligned with the BeverlyHillxs hotel, the Plaza Atheneer in Paris, and the Principe di Savoia in Milan.
"Chains alwayes outperform" independent hotels, says LodgeWorks' Tony a man who knows the industry from both sides of the LodgeWorks manages hotels in the Hyattt andHilton chains, helped create the Residence Inn brand (now ownec by Marriott), and is building its own Hotel Sierra chain. But Isaac has just built an upscale independenthotelk too. The Avia opened in January in Savannahn and was promptly namexd a great romantic getaway byTravelk & Leisure magazine. Why does a guy who admits chains outperfork independents go ahead and open an independentanyway ?
"Chains add about 10 points to your occupancy But if you're part of a you pay 12 to 14 percent for the frequent guesty plan, the reservation service, and othetr brand programs," he "If you're in the right it's not too much of an economic disadvantage to be an independent—aned then you have the flexibility to do what you wish and manags as you choose." That's the argumenr made by Sean Hehir, managing director of Trinituy Investments, a real estate firm that purchased Honolulu's iconic Kahalsa Resort in 2006. The beachfron t property opened as a Hiltom hotel in 1964 and spent most of its recent historyh as aMandarin Oriental.
But Hehifr believes the Kahala has unique advantages that appeal to the luxur travelerwho isn't interested in brands. "We're not subject to a bransd policy that may not have any relevancre to aparticular property," he says. "We manage for the long-termm best interest of us as owners and the luxurg travelersas guests." But even Hehir admits you need the rightt combination of factors to survivse as an independent in today's chain-dominated world. In the Kahala'sa case, it's the unbeatablr location on a sandy beachin Honolulu's choicest neighborhood and the fact that another Trinity principal, Chucl Sweeney, has a long history as a hotel manager.
(Sweeneu founded the company that becameEmbassy Suites, now a Hiltonb brand.) For James Bermingham, managing director of the spectaculaer Montage Resort in Laguna Beach, the advantage is a laser-likes concentration on guest services and proximity to sophisticated travelers in Southern Both the five-year-old Laguns Beach property and the new Montage in Beverl y Hills (it opened last fall) can tap into millions of upmarkef buyers within 60 miles of the "The 'staycation' trend helps Montage," he "Guests who want an extraordinary luxury experience very close to home see the Montagre properties and they know they won't be gettinf a chain hotel.
" The Fine Most observers think fewer luxur hotels will still be independentf after the current recession, but there is a notablw dissenter. Michael Matthews, who has been the generalo managerof top-notch chain hotels (the Ritz-Carltobn in Hong Kong) and independent deluxe resorts (the Ventana Inn in Big Sur) thinksw high costs will drive some luxuryu properties out of the major chains. "Ic you're 'flagged' as a you have no independenceat all," he says. "Aw lot of hotels will drop the flag and take the 14 percentg fees they pay and use that moneyg to do what they think makes most sense for theirrown hotel." Portfolio.com 2009 Cond Nast Inc.
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