Greenbrier Bankruptcy, Marriott Sale

CHARLESTON, W.Va. — The historic Greenbrier resort, which has gone from hosting presidents and royalty to posting losses, filed for Chapter 11 bankruptcy protection Thursday and unveiled a plan to sell itself to hotel giant Marriott International Inc. for up to $130 million.

A recession-fueled drop in demand for luxury hotel rooms helped drive The Greenbrier to a deal that would end nearly a century of ownership by railroad company CSX Corp. and its predecessors of the resort, which blossomed from an 18th century sulfur spring retreat to a society hotspot in the roaring 1920s.

Under the sales plan revealed in the bankruptcy filing, Marriott would receive $50 million over two years from Jacksonville, Fla.-based CSX Corp. to operate the resort. Marriott in turn would pay CSX between $60 million and $130 million within seven years, depending on timing and the hotel's financial performance. The deal is expected to close later this year, pending new labor agreements and approval from a bankruptcy court, which is expected to allow other potential buyers to make bids.

Bethesda, Md.-based Marriott would be getting a fabled resort on the National Register of Historic Places whose guests have included Dwight Eisenhower and 25 other U.S. presidents, Monaco's Prince Rainier and Princess Grace and the Duke and Duchess of Windsor.

The 6,500-acre resort in southeastern West Virginia with 721 rooms also is the site of a once-secret Cold War bunker built to house Congress in case of a nuclear attack.

"The Greenbrier is an historic national treasure and we are excited by the opportunity," Marriott spokesman Thomas Marder said. "There are a number of conditions to work through which we hope will be completed successfully."

Marder said Marriott plans to retain the Greenbrier name.

Voters narrowly approved a measure in November allowing casino-style gambling at the resort. Asked about Marriott's plans for gambling, Marder did not answer directly. "Our interest in the Greenbrier is unrelated to the changes in the county's gaming laws," he said.

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CSX would be ridding itself of a money losing property blamed for a 32 percent drop in CSX's fourth-quarter earnings.

Luxury properties have been hard hit as demand for hotel rooms overall has fallen sharply since last fall. The downward trend has accelerated this year after several companies that received emergency federal funds came under public criticism for hosting retreats at fancy resorts.

The Greenbrier has lost more than $90 million in the past five years, including $35 million in 2008, and the bankruptcy filing shows the flow of red ink is speeding up.

Monthly revenue fell to just over $1 million in February from more than $2.7 million in January, according to the filing. The resort's pretax loss at $3.74 million in January and $4.96 million last month.

The filing estimates the resort's assets are worth between $50 million and $100 million. It owes between $100 million and $500 million to more than 5,000 creditors, including $91 million to CSX.

During an afternoon hearing in U.S. Bankruptcy Court in Richmond, Judge Kevin R. Huennekens granted a series of motions, including interim approval of $19 million in debtor-in-possession financing from CSX. Attorneys for the Greenbrier said only one third-party lender offered financing, but under stricter terms.

"The potential outcome of this transaction would help preserve an important and historic property in West Virginia," CSX spokesman Garrick Francis said.

The Council of Labor Unions, which represents approximately 909 of the resort's 1,318 workers, said it looks forward to negotiating with Marriott or any other prospective buyer. "It is our understanding that during this process that the day to day operations of the resort will continue and our members will continue to work."

The unions and the resort have been unable to reach a new collective bargaining agreement for more than a year.

CSX's agreement to provide debtor-in-possession financing requires a new contract that satisfies Marriott or other potential buyers. If a deal isn't reached, the resort would default on the financing unless Huennekens intervenes.

In a document included with the bankruptcy filing, Greenbrier Chief Financial Officer Michael McGovern blamed the labor disagreement for $25 million in lost revenue last year.

The resort has been seeking concessions from the unions because wages and benefits consume 70 percent of revenue, compared to an industry average of about 40 percent of revenue, McGovern said.

If the resort can't get concessions at the bargaining table, McGovern said it will ask the court for relief.

Gov. Joe Manchin, who had been trying to line up a buyer for the resort, said it was good news that a "world class" buyer has emerged.

Retired NFL great Sam Huff, a former Marriott vice president who said he spent the past month getting Marriott involved, said the hotel giant will fix The Greenbrier's problems.

"This is the finest resort in the world and it's down, the employees are down, the hotel is down and I think this is the right move for everybody involved," Huff said.

The Greenbrier has struggled to revamp its image and connect with younger well-heeled travelers.

It spent $50 million on renovations including wireless Internet, flat-screen televisions and a high-end gourmet restaurant and cocktail lounge in 2007. But the makeover wasn't enough to regain the coveted Mobil Travel Guide fifth star that it lost in 2000.

___

Associated Press writers Kristen Lee and Samantha Bomkamp in New York, Vicki Smith in Morgantown and Michael Felberbaum in Richmond, Va. contributed to this story.

Comments

[ibsteve2u]

Huh. Wonder if Marriott will change the name of "The Old White Club"?

[obamaworship]

http://www.flickr.com/photos/coyote2012/3330589493/

The end is here

[Ramirez]

The top-secret government bunker at the Greenbrier was exposed by the Washington Post (surprise!) in 1993.
From the Plain Dealer:
******

Ted Gup's disclosure of the Greenbrier bunker still controversial 17 years later
Posted by Susan Glaser/Plain Dealer Reporter March 13, 2009 13:12PM

Twenty-inch-thick doors, made by the Mosler Safe Co. in Hamilton, Ohio, shielded the Greenbriers top-secret congressional bunker from the outside world for three decades.Seventeen years after the outing of the top-secret Greenbrier bunker by journalist Ted Gup, the incident is still a flashpoint at the resort for what many consider a serious betrayal.

Gup's name is mentioned -- spelled out, even -- on bunker tours as the man who "compromised" the Cold War fallout shelter, which would have housed members of Congress during an evacuation of the Capitol.

Yet Gup, now a journalism professor at Case Western Reserve University, says the shelter, built in the 1950s, was obsolete in 1992, when he wrote the story for the Washington Post. ...

http://blog.cleveland.com/pdextra/2009/03/ted_gups_disclosure_of_the_gre.html

[Taiyo]

Odd that you should post this, otherwise I would never have known. I just finished Terminal Freeze, a book by Lincoln Child, and I'm sure that this is the resort that is described in the book as a former bunker/fallout shelter/archive. Very interesting. Oh, just to be clear, this is NOT a plug for the book. In that case, don't bother.

[Taiyo]

BTW, I mention this simply because I thought the resort in the story was fictitious. I had no idea there were such places. Guess I'm pretty naive.

[Ramirez]

The Greenbrier was the fallout shelter to the stars and tours of the underground bunker are available.
From PBS:
****

During the Cold War the United States government maintained a top-secret underground bunker in the mountains of West Virginia. Built under The Greenbrier, a luxurious Southern resort, the facility was designed to house the members of the House of Representatives and the Senate in case of nuclear attack. Compromised by an investigative reporter in 1993, the bunker is now open to the public. With the code name "Project Greek Island", it remains a sobering reminder of how America lived with and prepared for the possibility of a Soviet nuclear attack.

http://www.pbs.org/wgbh/amex/bomb/sfeature/bunker.html

[davidwayneosedach]

Sell it to the Chinese!

[primeelite]

Sad to see this as it has been a very historic place, hope the Marriott takes good care of it if they end up buying it.
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