Here’s a story that seems to have slipped past all of us. On March 31, the Westin Casuarina was placed on “Imminent Default” status by Fitch Ratings. The property was running at 61.5% occupany, with ADRs of $119 and 61.55 respectively, as of a year ago. Other Las Vegas Strip hotels have done far, far worse but they’re usually not laboring under the overweight jockey that is owner Columbia Sussex‘s portfolio of expiring loans. Part of the reason ColSux is trying to spin 14 hotels off to Clearwater Hotel Trust is that it had a $215 million loan due July 1, and a $1.1. billion one that comes due on Oct. 12 and has run out of extensions.
The latter was undertaken to finance a 14-hotel Wyndham acquisition during the easy-credit years of 2005-07. During ColSux’s stewardship, occupancy fell from 76% to 60%. The company’s financial position buckled further after it blithely ran up another $2.8 billion in debt to purchase Aztar Corp. (a transaction that was an express train to bankruptcy court).
While the Westin Casuarina teeters near default, ColSux is playing out the string at the Horizon casino-hotel, up in the dwindling Lake Tahoe market. The Horizon’s lease expires March 31, 2011 and landlord Park Cattle Co. has shown every intention of giving ColSux the heave-ho and making the Horizon a casino-less property. The tenants have a tough row to hoe anyway, as reorganized Tropicana Entertainment stripped away much of the Horizon’s game inventory on the way out the door … the better to ramp up Montbleu, the former Caesars Tahoe.
This aggregation of ColSux data is the work of frequent William J. Yung III nemesis Unite-Here, so one must carefully sift the data to keep it in context. It also casts some doubt on the viability of Clearview, whose CEO, Jon D. Kline, left previous employer Sunstone Hotel Investors in a state of dilution and ruination.
In any event, this latest chapter in the rise and fall of Columbia Sussex as a casino power is yet another cautionary tale of companies so high on the crack cocaine that was ready credit they rang upon debt upon debt with too little thought given to the day of reckoning. The blue-sky scenarios that led to the crash and burn of the casino industry must look trippin’ in retrospect.
Wanna pay a “resort fee” at the Westin Casuarina, then pay tax on that, too?
From http://www.vegas.com/resorts/westin/:
“Incidental charges: Hotel requires a credit card for incidental charges. Hotel charges a service fee of $9.50, plus tax, per night, which covers the cost of daily newspaper, valet parking, access to fitness center, access to sauna and steam rooms at the spa, bottled water in room, incoming faxes, access to pool and spa tub, unlimited local and 800 calls, airline boarding pass printing and notary Public services. The resort fee listed above does not include tax. Some resorts also apply room tax to their resort fee.”
I can’t say I don’t hope that something does happen with the Westin, with the right ownership, I think it could be a very intriguing property in current times. They could easily put together a solid base of gamblers, work to make them loyal and ride out the inevitable bumps that still are going to occur on the strip. It’s funny that during the boom years the George Clooney style casino that he envisioned would be nothing more then something like the Westin possibly spruced up a bit and used in that manner.
I stopped by the Westin Casuarina in April of 2008 and played blackjack for about an hour. It was on a Thursday night at 11PM and there was not a cocktail waitress on duty so I had to walk to the bar and get myself a beer. It was not to crowded in the casino and most of the dealers looked very bored.