CHARLESTON, W.V. -- The posh Greenbrier resort that has housed presidents and royalty in West Virginia has filed for Chapter 11 bankruptcy and signed a deal to sell itself to hotel giant Marriott International.
The four-star resort said Thursday its owner, Jacksonville, Fla.-based railroad company CSX Corp., would lend Marriott $50 million to operate the hotel for two years.
Bethesda, Md.-based Marriott would repay the loan and also pay CSX between $60 million and $130 million within seven years.
The Greenbrier has struggled with the poor economy and lost $35 million in 2008.
Guests have included President Eisenhower and Monaco's Prince Rainier and Princess Grace. It is also the site of a once-secret Cold War bunker to house Congress in case of a nuclear attack.
(The preceding article was distributed March 19, 2009, by the Associated Press.)
The Greenbrier resort -- grand and stately, remote and peaceful -- has been a destination for the well-to-do since 1778. Joseph and Rose Kennedy honeymooned there. Twenty-six presidents have visited, as have Prince Rainier and Princess Grace. On the off chance of a nuclear attack, there was a once-secret bunker for Congress to convene, the Washington Post reports.
But yesterday, some of those historical tidbits found their way into something decidedly less regal -- a Chapter 11 bankruptcy reorganization filing.
The West Virginia resort, which has fallen on hard times during the recession with the rest of the lodging industry, has lost the backing of its parent owner, the railroad company CSX Corp., which was described in the bankruptcy filing as "unable and unwilling to continue funding" the resort's losses.
The resort owners have struck a tentative deal to sell the 720-room property to Bethesda-based Marriott International for up to $130 million.
"A sale to Marriott would be a great outcome for everyone associated with The Greenbrier," Michael Gordon, president and managing director of the resort, said in a statement.
The Greenbrier has lost $90 million in the past five years, and the situation shows no sign of improving. Revenue fell from $2.7 million in January to about $1 million last month, according to financial statements included in the bankruptcy filing. The hotel owes $100 million to $500 million to its creditors.
In its filing, Greenbrier officials cited several reasons for the hotel's problems. Among the most obvious: "The credit and financial crisis that caused the current global recession has struck the luxury resort and hotel market particularly hard. Discretionary spending for goods and services such as those provided by (The Greenbrier) has fallen precipitously."
Also, resort officials indicated they are locked in difficult negotiations with the property's unions, saying 70 percent of all revenue went to wage and benefit costs -- well above the 40 percent industry average cited by the company. Resort officials have said the labor troubles had caused large groups to cancel reservations.
Yesterday, union officials said in a statement that they were consulting with lawyers before making any comment or taking any official action regarding the bankruptcy.
The Greenbrier went on the market last year, and Marriott emerged as the highest bidder, according to court documents. But there were sticking points because of the labor situation. As part of the deal with Marriott, the current resort owners must negotiate union labor contracts that are satisfactory to Marriott officials.
"The wage costs there are higher than they need to be for the property to be able to run at economic viability," said Richard S. Hoffman, an executive vice president in Marriott's development group.
Greenbrier spokeswoman Lynn Swann said negotiations were proceeding.
Should the deal with Marriott go through, CSX would give the Bethesda hotel chain $50 million to initially operate the resort. Marriott officials said they could use the cash to cover initial operating losses and to continue to upgrade the property, a process that began in 2006.
Then, within seven years, the deal calls for Marriott to pay the resort's former owners $60 million to $130 million. The total amount Marriott would pay is contingent on the resort's financial performance.
Marriott officials said there are no plans to change overall identity or name of the property.
"It will definitely stay the Greenbrier," Hoffman said. "It will always be the Greenbrier. This is a great historic property that we think we can do wonderful things with."
However, Hoffman said it was too soon to say exactly what Marriott would do. An open question, for instance, is whether Marriott would keep the resort's medical clinic, where executives for years have gone for head-to-toe exams.
"It's just premature for us to talk about specific things," Hoffman said.
(This item appeared March 20, 2009, in the Washington Post.)
