Marriott’s $210M Gaylord Purchase Brings Structural Changes
By Scott Baltic, Contributing Editor
Gaylord Entertainment Co., of Nashville, has agreed to sell its Gaylord Hotels brand and the management rights to its four hotels to Marriott International Inc. for $210 million in cash.
The four hotels are the Gaylord Opryland Resort and Convention Center in Nashville; Gaylord Texan Resort and Convention Center in Grapevine, Texas (metro Dallas-Ft. Worth); Gaylord Palms Resort and Convention Center in Kissimmee, Fla. (Orlando area); and Gaylord National Resort and Convention Center in Prince George’s County, Md. (metro Washington, D.C.). Together, they total about 7,800 rooms and feature about 2 million square feet of meeting and event space.
The deal is conditioned on Gaylord’s shareholders approving the company’s conversion into a REIT, which should be decided at a shareholder meeting in August. Assuming that approval is given and other typical hurdles are passed, the Marriott transaction is expected to close by October.
And once Gaylord does transition to a REIT structure, to be effective Jan. 1, 2013, it will at that point reportedly be the only lodging REIT focused primarily on group-oriented destination hotels in urban and resort markets.
The presumptive REIT conversion is also causing Gaylord to rethink a pending development project, announced in June 2011, to develop a large resort and convention hotel in Aurora, Colo. As a REIT, Gaylord said, it will no longer view large-scale development as a means for growth and will not proceed with the Colorado project in the form previously anticipated. The company will re-examine how the project could be completed with minimal financial commitment by Gaylord during the development phase.
The Aurora property is expected to initially feature 1,500 guest rooms and 400,000 square feet of exhibition and meeting space. The project was initially projected to cost about $800 million, to be funded by Gaylord, potential joint venture partners and the tax incentives from the City of Aurora. The site is on 85 acres in LNR Property CPI Fund’s High Point Master Plan Development.
The original timeline called for ground to be broken in mid-to-late 2012, with the resort open for business by mid-to-late 2015.
Once the Marriott deal is closed, Gaylord Hotels will join the Marriott portfolio of brands, and the hotels will continue to be managed under the Gaylord Hotels flag. Marriott will receive a management contract with an initial 35-year term, 2% base management fee and an incentive fee linked to improved profitability.
Gaylord’s other assets include the Radisson Hotel Opryland, Ryman Auditorium, General Jackson Showboat, Gaylord Springs Golf Links, Wildhorse Saloon, and WSM-AM. Gaylord will continue to own and operate these as taxable REIT subsidiaries.
WSM-AM is best known as the home of The Grand Ole Opry, the world’s longest-running radio program. The Ryman Auditorium, built in 1892, was the Opry’s home from 1943 to 1974 and is still used as a concert venue.