My friends over at VegasChatter seem to think this could be the first Barry Sternlicht-ing of Vegas since the days he used to operate CaesarsWorld in the 90s. I’m not so convinced.

Sure, Sternlicht and Starwood have been involved with trying to take over the Riveria for years now.. Just do a Google search for Rig Acquisitions Sternlicht and you’ll see what I mean. But there is something else that Sternlicht sees in the property – it can’t be the building, its small compared to the rest of the Vegas casinos, its not in the ‘heart’ of the Strip – in fact its almost in no-man’s land compared to CityCenter and other ‘it’ casinos; its surrounded by the unfinished shells of Echelon Place & the Fontainebleau and casinos of yesteryear like the Las Vegas Hilton & Circus Circus.

It could very well be that Sternlicht sees the potential in the site come, 10 – 20 years when projects like Echelons Place or The Plaza ever get off the ground (if they ever do that is!)

Or.

Sternlicht could just see a good deal.. after all, the Riveria has been on its last legs for a few years now – before any economic downturn even started, and buying a mortgage for 50 cents on the dollar, well.. that’s just a good investment, and that’s really what Starwood Capital is all about.

andrew@alconic-inc.com

To amend and restate the Certificate of Incorporation of the Company to change the name of the Company from “MGM MIRAGE” to “MGM Resorts International” 

This change, if approved (and it most likely will) will take effect immediately – in fact MGM Mirage already has the new domain name up and running – just redirecting to their current site. (http://www.mgmresortsinternational.com) 

As companies grow and evolve over the years – its sometimes necessary for them to change their name to better reflect the direction they are heading in. Some examples which come to mind are Apple Computer changing to Apple, Inc. in January 2007, or who could forget Radio Shack’s corporate name from 1963 until May 2000 - Tandy Corporation. 

There has been some speculation that the reason MGM is dropping the Mirage name is to distance itself from Steve Wynn, who sold Mirage Resorts to MGM Grand, but that sounds too much like a conspiracy theory when it looks like all MGM is trying to do is better reflect their growing stable of businesses and international footprint. 

When MGM Grand, Inc and Mirage Resorts, Inc first merged, each property contained gambling, and was located within the Continental US. Now, MGM-MIRAGE now has a number of non-gambling properties in the planning stages, and they’ve also started to franchise some of their brands through MGM-MIRAGE Hospitality. Plus their footprint now reaches beyond the shores of America from Dubai, to Vietnam and Macau. 

An example of the MGM brands being franchised can be found in the Dubai Pearl development, where they are constructing Bellagio Residences and Hotel, MGM Grand Hote and a Skyloft Hotel (based upon the Skylofts at MGM Grand in Las Vegas.) Two brands that MGM-MIRAGE Hospitality has not really provided details on is their mx and emblem brands which were mentioned in a profile done by Hotels Magazine back in 2008, but that magazine has since shut down their website. 

While I’m sure the brand recognition will help fill these hotel-only resort properties, I think it will be interesting to see how people will respond to going into an MGM Grand w/o being able to gamble. 

andrew@alconic-inc.com 

Not too many details have been released about this transaction – including the cost of the transaction – but both companies claim that Starwood will contribute both capital and deals to Hersha Hospitality Management.

Starwood’s purchase of just less than a controlling interest gives them easy access to a great hotel management company – enabling them to not have to staff up and create the SH Group as a leading management company from scratch, it also provides Hersha, a private company, with some capital as well as great management opportunities that Starwood Capital is privy to due to its own investments.

HHM specializes in select-services brands – as that makes up almost 75% of their portfolio – although in the press release its stated that HHM and Starwood will look for both select and full-service contracts. It’s interesting to note that Barry Sternlicht has said in the past that the opportunities in lodging at this point are more in the mid-scale/select services vs high-end luxury. Most of HHM’s properties are branded by the majors – IHG, Marriott, Hilton and Starwood, but lately they have been managing more independent boutique hotels, especially in New York City.

It’s hard to say exactly what this transaction means for Starwood Capital’s own SH Group, 1 Hotels & Baccarat Hotel brands, but its obvious that this will benefit both Starwood & HHM by providing each party with a service that they need. One change I can see this transaction enabling HHM to do is cast a wider net increasing their geographic service area – currently HMM manages properties encompassed within the triangle which goes from Boston, MA, to Virgina to Pennsylvania.

Today was the first day of the Annual NYU International Hospitality Industry Investment Conference, so this could be the first of a few good deals that are announced, and hopefully more details will be provided.

andrew@alconic-inc.com

Another day, another casino in the sights of the Starwood Capital Group.

What’s going on here?

It’s interesting to watch how Starwood Capital has shown so much interest in Las Vegas casinos over the past month or so – the past few years even if you consider their initial bid for the Riveria on the strip.

Although its all rumors at this point, Bloomberg Business Week has a story about Starwood Capital’s (and Colony Capital’s) interest in purchasing the Rio casino from Harrahs. Harrahs has been looking to divest the property since they purchased the Planet Hollywood and is looking for interested bidders. Harrahs purcahsed the Rio in 1998 for $888 million, and according to the Business Week article – the property is only worth $500 million now.  

So why are all these private equity firms looking to get into the casino business? Its interesting to watch Carl Icahn place a bid on almost every project in Atlantic City & Las Vegas that is having financial difficulty, Starwood Capital’s interest in the Riveria and now apparently the Rio, along with Colony Capital’s current ownership of the Hilton Las Vegas and Atlantic City. Why?

I’d think that it would be too much trouble to go through the gambling licensing procedures for a private equity firm to even consider dabbling in this, but if you look at the history of these three firms – they have gambling in their blood.

Colony Capital has owned the Hilton in Las Vegas since 2004, the Atlantic City Hilton since 2005 and Resorts International since 2000.

Carl Icahn purchased the Sands casino in Atlantic City in the early 2000′s but quickly sold it to Pinnacle Gaming, but now he owns the unfinished Fontainebleau and the Tropicana in Atlantic City

Barry Sternlicht, from the Starwood Capital Group was probably the first out of these three to get into the casino business with his purchase of ITT-Sheraton which included Caesars World in I believe 1998.

Its interesting to see what everyones intention will be – its known that casinos are great for their free cash flow – something a Private Equity firm loves, but its obvious that some people look at the purchase of a casino as just a passing investment – similar to how Carl Icahn has looked at his investment in the Sands in Atlantic City and possibly how he will look at the Fontainebleau once the economy picks up.

andrew@alconic-inc.com

One project though – the 1 Hotel Washington DC actually seems like it will be their flagship location – that is.. Once it finally gets off the ground.

Last week I came across a story which did some investigating the status of the 1 Hotel Washington DC – now currently an undeveloped plot of land surrounded by “1 Hotels Coming Soon” signs.

(Photo from Bisnow.com)

It seems as though they were able to get in touch with Neil Jacobs, Starwood Capital’s lead for the SH Group which is in charge of the 1 Hotel & Baccarat Hotel brands.

Neil stated

that the project has slowed due to the credit freeze, but that he’s hopeful it’ll resume by year end.

Unfortunately, that’s also the same time that Perseus Realty Group (the developer) has as their scheduled opening time frame.

Neil also stated that Starwood owns the land free and clear so there is no rush to finish the project due to a mortgage or bank commitment.

Sigh, so when will we see a 1 Hotel?! Hopefully during this time Starwood has had a chance to refine the brand even more, ensuring its success once it finally launches.

andrew@alconic-inc.com

Louvre Hotels is one of the pioneers of franchised hotels and has long experience, built over 150 years through its parent company Société du Louvre, in the hospitality business and franchise development.

Louvre Hotels dates back to 1855 when the Grand Hôtel du Louvre opened in Paris. In 1879 the owners of the next door clothing store, Les Galeries du Louvre, bought the hotel, expanded the store and moved the hotel operation to where the luxury Hôtel du Louvre stands today.

In 1889 the company opened a second hotel and adopted the name Société du Louvre. Twenty years later, the most famous Concorde property, the Hôtel de Crillon, opened after refurbishment. By 1930 the company was listed on the Paris Stock Exchange.

In 1970 the luxury hotel portfolio was grouped under the Concorde name and six years later Société du Louvre acquired its first budget hotel chain, Campanile. Campanile forms the basis of Louvre Hotels budget hotel offering. It is arguably Europe’s best-known hotel brand, benefiting from a 30 year history, and was joined by Première Classe in 1989 and the brand offer completed by the creation in 2000 of the Kyriad and Kyriad Prestige brands.

Read the article here in its entirety.

The excerpt above doesn’t mention how Golden Tulip was purchased by Starwood Capital earlier this year and has since been merged into the Louvre Hotel Group. They’ll spend the beginning part of next year integrating Golden Tulip’s systems, and I think we’ll see Golden Tulip and Tulip Inn’s become sister brands with the Concord, Kyriad, Kyriad Prestige, Campanile, and Premiere Classe brands which already make up the Societe Du Lovure portfolio..

andrew@alconic-inc.com

In 2001 a company called Asbury Partners purchased most of the waterfront land in Asbury with the goal of tearing down eyesores, rebuilding the infrastructure and building retail and housing components. 8 years later – there has been significant progress, but not at all the amount of progress Asbury Partners and the general public was hoping for.

Locally, the skeptics all claim that Asbury Partners was another sham developer who never went through with their promises, etc etc – but I’m a firm believer that Asbury Partners did A LOT, and their main downfall was due to the economic fallout that has been experienced throughout all development in the world.

I think it deserves to be mentioned how Asbury Partners brought in Madison Marquette to spearhead the boardwalk re-development. That is – development on the boardwalk. Madison Marquette has done an amazing job reinvigorating the boardwalk and the retail components on the boardwalk. They’ve even gone above and beyond what they initially “signed up for” by purchasing a condo development (Wesley Grove) that would have gone into receivership and provided another black eye to Asbury.

Today I found out that Asbury Partners has essentially defaulted on the loans they took out to purchase the waterfront property and it will be taken by iStar Financial, who will then become the Master Developer of Asbury.

(Bit of a side note: iStar Financial was started by Barry Sternlicht and Starwood Capital in 1993, in 1999 it was spun off into its own independent company. I just love learning about the influence that Starwood Capital has had.)

In the article from the local newspaper (Asbury Park Press) it states that iStar will essentially become the Master Developer – and will look to get its money back from the defaulted loan by selling the individual properties that Asbury Partners currently owns.

Whats odd about this arrangement is that iStar doesn’t seem to have any experience in real estate development.. iStar is a financial company which deals in real estate transactions.. From their website:

Today, iStar is a true “one-stop” private banker to high-end commercial real estate owners in the U.S. and internationally. We are primarily an on-balance-sheet lender with a full product range of capital solutions, from senior and mezzanine real estate debt to senior and mezzanine corporate capital, to corporate net lease financing and equity.

I have to say – iStar is a good company but I really have my doubts about them becoming the Master Developer of Asbury. It almost sounds as though this is a project that fell into their lap due to the economy, and instead of calling it a loss and writing it off – they are trying to make it work – by getting involved in something that is not entirely their forte.

My only hope is that iStar knows what its doing and really does have Asbury’s best interests at heart. I understand they have to make a profit – but at the same time, Asbury has been through so much troubled times..

Please don’t add to it.

andrew@alconic-inc.com

Post Card Inn on the Beach is a unique hotel located in St. Pete’s Beach, FL (not St. Petersburg) in what used to be an old TravelLodge. Starwood Capital had purchased the property a number of years ago to build a high end luxury hotel (1 Hotel?) but the town wouldn’t approve it mainly due to the building height they were asking to build.

Since then, Steve Hanson, the President of B.R. Guest Restaurants suggested to Barry Sternlicht to open a smaller hotel on the property – utilizing the existing building, and doing a major cosmetic renovation. The result is the Post Card Inn at the Beach, featuring a WildWood BBQ & Grill Restaurant (the second WWBG in the B.R. Guest Empire) and a hotel which has a very laid back, beach theme – with a price point at about $149 a night. It’s not Super 8 prices – but its not Westin/Hilton at destination location prices either.

Even though B.R. Guest is owned by Starwood Capital – Post Card Inn is mainly a B.R. Guest operation. Steve Hanson created The James hotel in Scottsdale, AZ in 2004, and begun work on its sister property The James Hotel in Chicago. He’s no longer affiliated with The James – of which the Scottsdale one was purchased by Morgans Hotel Group and has been converted into the Mondarian Scottsdale.

Where the Post Card Inn will go from here isn’t really known; Sternlicht inferred in his interview that the Post Card Inn will be a brand, and the press release has inferred that as well. I’m just not sure that you can really replicate a hotel like this (surfing-type) easily in multiple locations – especially within the United States where the ocean can’t be reached for hours. Then again – a brand doesn’t have to mean hundreds of hotels – it could be simply a few locations in towns by the beach up and down the East and West Coast.

With someone like Barry Sternlicht and Starwood Capital involved behind the scenes – crazier things have happened..

andrew@alconic-inc.com

I accidently came across this interview today – live – while looking for a picture of Barry Sternlicht & Steve Hanson ringing the opening bell at the NYSE this morning.

Wow. I’m glad I did. (Archived version of web cast should be available here)

Maria Bartiromo, interviewed Barry for about 15-20 minutes where he gave a lot of interesting insight into how he became successful and how he looks at the world and how he became who he is today.

• Sternlicht started Starwood Capital at 31, after losing his job in real estate, and being completely broke, very humble beginnings.
• He created Starwood Capital because he loved real estate and he loved finance, and he loved design and architecture “if you can make money doing something you love – that’s great”
• Says never give up and keep trying, failure is good. If he didn’t fail with his real estate job before Star Cap, he would not be where he is today.
• When he put together Starwood Hotels, he always dreamed of starting W, a contemporary, modern, hotel chain – the likes of which were not seen before at the time.. Getting Sheraton and Westin together were just a way to the means to be able to build W.
• Made a short comment that I’m still researching.. I thought he said “We launched a new hotel brand, Place Card Hotels..” (I think that’s what he said – then mentioned the city, which I can’t remember) “and just opened the first location on Saturday..” Cant find any information about it anywhere. Anyone have any information?
• Started the Westin Heavenly Bed after his wife fell in love with a mattress from 1-800 Mattress. Thought – why can’t hotels have a mattress this comfortable? They’d pay an extra 20 bucks a room for it. When it would only cost the hotel an extra $.50. Now almost everyone has followed suit.
• Created 1 Hotels as a way to be environmentally conscious. Side benefits – employees & guests would self select.. Employees would search out top work for 1 Hotels to “do good” Guests would go after the brand which actually does good, rather than go to a hotel “which doesn’t wash towels every day and calls themselves environmentally conscious.”
• Guests who go to a 1 Hotel will take the experience home with them – creating the ability to sell things to guests after they leave.
• Sternlicht made an interesting sidenote about 1 Hotels, which demonstrates his humility; while talking about 1 Hotels, he said “We have yet to create one yet.. But you just don’t quit..”
• Made an excellent mention about being passionate about something – and using social media, including blogs to talk about that.. Says.. If you’re passionate about something, talk about it online – social media, create a blog, the people who share your same passion will come to you..

Well said Barry. I’ll hopefully be hearing from you soon.

andrew@alconic-inc.com

The 1Hotels.com face lift isn’t much really, just removing the links for the original 1Hotel properties (Washington DC, New York, Seattle, Scottsdale) and replacing it with some beautiful images having to do with eco-consciousness and nature. Similar to the old site, there still is an area for “One” which seems to be a Concierge service similar to W Hotel’s Whatever/Whenever service that will be your One source for anything essentially.

Currently the only 1 Hotel location that’s known to be under development is the location in Washington DC. The website for the developer lists it as opening in late 2010, and says it will be the flagship property for the brand.

The new 1Hotels.com also shows the rendering of an unknown property at this time – ironically its also the same rendering which appeared in the background when Bloomberg TV interviewed Barry Sternlicht in May. Interview: Part 1 Part 2 (See picture below)

This is exciting to me because it demonstrates that Starwood Capital and Barry Sternlicht has not forgotten about the 1Hotel brand and even though they have slowed down development due to the economy and financing – they are still planning on making an impact in the lodging industry yet again as they did originally with the W.

The future is bright, I cant wait to see it.

andrew@alconic-inc.com