Good times keep rolling at rejuvenated Times Square The new and improved Times Square will become a little flashier in fall 2002 with the opening of the 45-story, 858-room Westin Hotel at Times Square. The $300 million hotel will be owned, developed and built by New-York-based Tishman Realty & Construction Co. Inc., and operated by Westin Hotels & Resorts, a subsidiary of White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide Inc. Designed by Miami-based Arquitectonica, the hotel's two 45-story towers will be separated by a curved light fixture.
The hotel will be connected to Tishman affiliates' E WALK entertainment and retail complex, and located within the 42nd Street Development Project, an urban renewal project occupying 13 acres along both sides of West 42nd Street between Times Square and Eighth Avenue. The hotel will feature 26,000 sq. ft. of meeting space, a spa and 34 suites.
Crestline and Bedrock plan $250 million buying spree Bethesda, Md.-based Crestline Capital Corp. and Dallas-based Bedrock Partners II LP have joined forces to acquire $250 million in hotels within three years. The partners plan to renovate 15 to 20 hotels and re-brand them in the upscale hotel market. Most of the acquired hotels will be managed by Crestline Capital's subsidiary, Crestline Hotels & Resorts Inc.
Crestline Capital will provide 10% of the equity for the joint venture, and the Citadel Group Realty Group LLC, which advised Bedrock Partners in the deal, will provide additional third-party equity. According to Crestline Capital, the partners will have no specific brand affiliation and will select brands that maximize property value. The team plans to acquire 150-room to 300-room hotels in urban, suburban and airport locations.
Bringing a little bit of Nashville to Texas Construction has begun on the $400 million Opryland Hotel Texas, a 1,500-room hotel to be located at the south end of Lake Grapevine about 15 minutes from the Dallas-Fort Worth International Airport. Owned by Gaylord Entertainment, the parent company of Nashville, Tenn.-based Opryland Hospitality Group, the hotel also will feature 400,000 sq. ft. of meeting and exhibition space. It is scheduled to open in spring 2003.
Gaylord Entertainment also is building the 1,400-room Opryland Hotel Florida in Kissimme-St. Cloud, Fla., near Disney World, which is scheduled to open in February 2002.
350-room Hyatt Regency on the Jersey City waterfront Cranford, N.J.-based Mack-Cali Realty Corp. and Chicago-based Hyatt Hotels Corp. are teaming up to build the 350-room Hyatt Regency South Pier Hotel in Jersey City, N.J. Scheduled to open in summer 2002, the nine-story hotel will be developed on the south pier of Mack-Cali's 1.9 million sq. ft. Harborside Financial Center.
According to Hyatt Development Corp. president Nick Pritzker, Hyatt Regency South Pier is the first full-service hotel on the Jersey City waterfront. The hotel, which will offer views of New York Harbor, will feature 19,000 sq. ft. of meeting space, a perimeter walkway and a public park.
Four Seasons to open 13 residence properties Toronto-based Four Seasons Hotels Inc. plans to open 19 properties over the next three years, with at least 13 of the properties offering long-term residency options. At these developments, the company will open residence clubs, condominiums and timeshare units alongside its traditional resorts. The company's residency expansion plan follows the success of the Four Seasons Hotel and Residences in San Francisco.
MGM lightens debt load by selling Bellagio paintings In the wake of its $6.4 billion acquisition of Mirage Resorts Inc., Las Vegas-based MGM Grand Inc. has sold 11 paintings from the Bellagio Hotel in Las Vegas for $124 million. According to MGM Grand president and CFO Jim Murren, proceeds of the sale will be used to reduce debt incurred in the Mirage acquisition, which was completed in May.
Stephen Wynn, former chairman of Mirage Resorts, purchased three of the paintings. The Bellagio Gallery of Fine Art closed in June pending the development of an exhibition schedule to be planned in cooperation with major museums.
AAHOA offers industry's first certification program Atlanta-based Asian American Hotel Owners Association will offer certification programs this summer and fall for hotel owners. In this first-ever program for industry owners, participants in the Certified Hotel Owners (CHO) program, will be taught how to manage and operate a hotel successfully. To receive a CHO certificate, participants must attend four management and four operations seminars over a two-year period.
AAHOA will hold "Front Office and Housekeeping" seminars Aug. 16 and 17 in Dallas; and Oct. 12 and 13 in San Francisco. "Human Resources and Law" seminars will be held Sept. 11 and 12 in Chicago; Oct. 16 and 17 in Atlanta; Nov. 6 and 7 in San Francisco; and Nov. 13 and 14 in Dallas. For more information, call the Atlanta AAHOA office at (404) 816-5759. Classes, which are free, are available only to AAHOA members.
Also in New York The 444-room Hilton Times Square and 463-suite Embassy Suites Hotel at Battery Park City recently celebrated dual grand openings. The projects are co-owned by Beverly Hills, Calif.-based Hilton Hotels Corp. and Cleveland-based Forest City Ratner Companies (FCRC).
The 25-story Hilton Times Square is part of FCRC's $290 million 42nd Street project, which includes a Madame Tussaud's Wax Museum, a 25-screen theater complex and several dining and retail outlets. Part of FCRC's $163 million Battery Park City project, the 14-story Embassy Suites Hotel at Battery Park City features suites ranging from 450 sq. ft. to 800 sq. ft.
Residence clubs also are under development at Four Seasons resorts in Scottsdale, Ariz. and Aviara, Calif.
The signature architectural element of the hotel will be a glass-roofed atrium imprinted with a gigantic Lone Star emblem designed to be visible to airplane passengers arriving at the airport.
MGM Grand now owns 18 Casino properties on three continents, including former Wynn properties Bellagio, The Mirage, Treasure Island and New York, New York Hotel, all in Las Vegas
New York University's 22nd International Hospitality Industry Investment Conference was as bustling as ever June 4-6. Industry executives had the opportunity to network, hear speeches from some of hospitality's top CEOs and attend seminars at the conference, held for the second consecutive year at the Times Square Marriott Marquis. Perhaps the most anticipated event was the fifth annual "Deal of the Year," which is awarded to a deal that had the most profound effect on the industry in 1999.
The Hilton/Promus merger certainly fits that bill. With its $3.7 billion acquisition of Memphis, Tenn.-based Promus Hotel Corp., Beverly Hills, Calif.-based Hilton Hotels Corp. suddenly became a much bigger player in the hotel industry. The acquisition enhanced Hilton's position as a multi-branded owner, operator, manager and franchiser. Following the merger, Hilton became the second largest hotel operator in the nation with control of 1,670 hotels. Washington, D.C.-based Marriott International remained in the top spot with 1,719 hotels, while White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide Inc. occupied third place with 700 hotels.
Before the merger, Hilton's brands included Hilton, Hilton Garden Inn and Hilton Suites. The company also operated vacation resorts under the Hilton Grand Vacations flag. With the Promus acquisition, Hilton added Doubletree, Embassy Suites, Homewood Suites, Hampton Inn and Red Lion brands.
More hotel mergers comin' up Mergers have been all the rage in the hotel industry, and there apparently is no end in sight to the consolidation frenzy. In fact, the pace of mergers is expected to speed up in the next few years, according to Hospitality 2000: The Capital, a study that explores financing trends in the hotel industry.
"The industry continues to consolidate," says Roger Cline, director of Hospitality Consulting Services at New York-based Arthur Andersen LLP. However, he adds, "There is a certain cynicism out there. In half the cases, people don't believe that the pre-merger benefits that tend to get advertised by the deal makers are realized following the merger."
Cline co-authored the study with Mark Warner, director of graduate programs for New York University's Center for Hospitality, Tourism and Travel. To identify major capital trends, the researchers surveyed investors, lenders, public and private owners, and other hotel industry executives in the Americas, Europe, the Middle East, India and the Asia/Pacific region.
Roughly half of the respondents expect the pace of consolidation to increase in the next three years. However, improving access to capital is not one of the top motivating factors. Companies are more interested in acquiring brands and improving market share through mergers, according to the study. Respondents expect consolidation to hurt smaller companies because investors will increasingly be on the lookout for large hotel projects, strong brands and companies with a global presence.
Cline says another important finding is investors' strong preference for "four-star" and "five-star" hotel properties, and their comparative reluctance to provide financing for budget properties. This trend concerns Cline.
"That's something that the industry clearly needs to deal with because obviously we serve a wide array of customers, and it's important that the industry provides a broad cross-section of product types," he says. "Attracting capital to one- and two-star type properties will be an increasing challenge."
Overall, investors are fairly bullish on the hotel industry on a global level. However, Cline sees a slightly pessimistic outlook in the United States.
"I think in the United States, [attitudes] are very mixed to marginally negative," says Cline. "Although long-term attitudes are generally positive, I think in the United States there is concern about the longevity of this business segment that we're in. We've obviously benefited tremendously from the strong economy."
Other findings of the study include:
* Two-thirds of respondents in the Americas believe that REIT ownership will diminish in popularity during the next three years.
* Finding competitively priced capital is becoming a bigger challenge. In all, 82% of respondents said obtaining financing is at least moderately difficult.
* The location of a hotel property is the most important factor affecting investing and lending decisions.
* Non-recourse mortgages are far more common in the United States than in other regions. In the United States, 79% loans are non-recourse; in the Asia/Pacific region 2% are non-recourse, 76% are guaranteed by the borrower and the remainder are a combination of the two. In Europe, the Middle East and Africa, 44% of loans are non-recourse.
* More than half of respondents report that their organizations have an information technology (IT) budgeting process involving a senior management team. However, the benefits of IT are uncertain because most companies do not have a measurement system in place to monitor IT investment performance.