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.

When Times Get Tough, The Tough Make Furniture?

"A pessimist sees the difficulty in every opportunity;

an optimist sees the opportunity in every difficulty."

Winston Churchill

Over the last week or so I've seen two different stories about luxury marquis in two very different industries making furniture in order to keep their factories busy.

The first, and more logical company to take this step is Petrof, the Czech piano maker founded in 1864. Over the last year as the economic climate has worsened and the demand for hand made pianos has seen similar declines the company has begun to make furniture and furniture grade kitchen cabinetry (pictured above). Currently their factory's production is 50% pianos, and 50% casework. It's not the first time the company has produced other products as a way of surviving difficult economic times, in the 1930s it produced wooden railway sleeper cars and in times of war it made grenade boxes.

The second, is the venerable luxury car company, Bentley. Their skilled woodworkers in their factory in Crewe has long been making gleaming walnut Bentley dashboard and wood trim. After an extended holiday furlough, the Daily Telegraph reported that these same craftsmen, 140 in total, have started using walnut off-cuts to make cabinetry, occasional tables and reception area furniture. The company, a division of Volkswagen, plans to use the furniture in Bentley showrooms. If the demand for these pricy pieces of rolling art remains depressed and the furniture is well received there are rumors that Bentley might come out with a line for the public. The company has been offering humidors, jewelry chests, and similar items for the past few years as custom order items with 20+ week lead times.

A Bentley Executive with a piece of their select burled walnut.

The upside for both of these firms, beyond the bit of revenue they receive from these side projectes is that they can keep these very skilled artisans employed in their workshops, many of whom are second and third generation craftsmen with very specialized skills. The danger in this strategy is that the demand for furniture is also less than robust.

Greenbrier Resort Struggling Despite Renovation

The historic Greenbrier Resort is the highest profile luxury resort property to be hit by the economic slump. CSX, the railroad company, which owns the Greenbrier engaged Goldman Sachs to explore options for the resort which lost $35 million in 2008; one can only assume one of the options being considered is sale of this National Historic landmark property. CSX itself is facing problems after seeing freight volume drop precipitiously on its lines. The resort includes multiple golf courses, fine dining restaurants, 721 guest rooms and suites as well as 96 guest and estate houses, and a 40,000-square-foot spa.

In addition to the economy management has had to deal with a difficult situation with the union ostensibly regarding the most recent layoff of 650 staff and a forced furlough in 2007 and talk of cutting healthcare and retirement bennefits.

Detailed photo of the front facade, notice the blue ceiling of the porte-cochere. A great southern detail in a very Draper shade.

For the design minded the resort was perhaps Dorothy Draper's crowning achievement. Her designs, in place for decades, introduced an American audience to a layering of fabrics (particulary oversized florals and stripes), mix of colors (greens and pinks), garden elements, chinoisserie, and the forever glamorous black and white checkerboard marble floors. In 2007 Draper's protege Carlton Varney worked on a $50 million renovation of the hotel. Freshening the hotel while preserving the Draper style.

A guestroom showing the vibrant color palette and mixtures of patterns.

Along with the refreshed decor came a relaxation of rules that had been in place since the resort opened including the requirement that men dress for dinner, and changes in the fee structure including the elimination of the "Modified American Plan" their version of the all-inclusive dining package.

The reception hall with all the Dorothy Draper hallmarks, including the large scale black and white checkerboard marble floor.

One of the most desperate attempts to restore the fortunes of the resort came in November 2008, when the resort pushed a ballot initiative to let the resort add casino gambling. The intiative passed, but so far no slot machines in the lobby.

A hall with oversized floral draperies and a wonderfully elaborate pediment in the distance. For fun count the colors.

Occupancy at the hotel as of the time of this post is around 100 on any given evening leaving over 600 empty rooms.

The upside in all of this? Great deals, in a quick perusal of their website they're offering $400 resort credits, spa packages, and free nights to lure in guests.