Tuesday, March 24, 2009

A New Owner for Troubled Greenbrier

In January I posted about the struggles facing the historic Greenbrier Resort in West Virginia. Last Thursday, March 19th, the 231 year-old Greenbrier succumbed to the current recessionary pressures and filed for Chapter 11 bankruptcy protection. According to court records the resort has lost more than $90 million in the last five years including $35 million last year alone, though it's unclear if any of this loss is attributable to the extensive renovations done in 2006 and 2007.

The landmark property, which has hosted 26 Presidents and some noteworthy royals including Monaco's Prince Rainier and Princess Grace and the Duke and Duchess of Windsor, has been owned by the railroad CSX since 1910. According to a statement released simultaneously with the bankruptcy filing the Greenbrier Hotel Corporation said it has struck an agreement to sell the resort to Marriott, pending the bankruptcy court’s approval and contingent on its renegotiating labor contracts before the sale. Labor costs associated with union contracts have been but one major hurdle in recent years.

If the deal goes through Marriott would receive $50 million over two years from 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. CSX would be cutting loose a n0n-core asset blamed for a 32 percent drop in CSX's fourth-quarter 2008 earnings.

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