State of Independence - Charlotte Business Travel Guide

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Well, the 230-year-old lodging icon has succumbed. The owner, railroar company CSX Corp., put the Greenbrier into Chapter XI bankruptcy inlate March, claiming $90 milliobn in losses during the last six years. And CSX promptluy called in—you guessed it—Marriott. CSX is so desperatw to unload the hotel that it will provides Marriott with as muchas $50 million to operatee the Greenbrier during the first two Marriott will then buy the resort within sevenn years for between $60 million and $110 million. Pending bankruptcuy court approval, the deal could close by Now, no one is aghastt at the prospect of a chaim runningthe Greenbrier. The unions seem amenable to Marriott'sd arrival.
West Virginia governor Joe Manchin publiclt applaudedthe deal. Newspapers statewide have cast Marriott'es arrival as a "rescue." And locals in hardscrabblee Greenbrier County support anything that will savethe resort'e approximately 1,300 jobs. Like all luxury hotel that have hit the economic andemotionakl skids, the Greenbrier's tale is unique: CSX has been a distracted and ham-fisted owner, battling both the hotel's unionse and the resort's former president, who sued for $50 The sprawling resort is physically isolated and expensive to (CSX recently spent $50 millionn on improvements in a misguided attemptf to regain the fifth Mobil Guidew star it lost in 2000.
) And despitr the loyalty of generations of repeat visitorx and fanatic golfers, the Greenbrier was disproportionatelyu dependent on corporate meetings, a travel categorh that has been devastated by the weak economg and the "AIG Effect." But the Greenbrier's sale to Marriott also raise s a more universal Can any luxury hotel or resort thrive—or even survive—as an independent property? In a worled where a handful of global hotepl chains—Hilton, Marriott, Starwood, Hyatt, Accor of France, and InterContinental of Britain—dominatwe the lodging market, can a singlew property, no matter how famous, stand alone? At least on the surface, the answer is no.
About half of the propertiez onthe Condé Nast Traveler Gold List and half of thoses that earn the prestigious five-star ratingv from the Mobil Guide are part of chains now, albeit luxury and ultra-deluxe operatora such as Four Seasons or Fairmont of Mandarin Oriental and Peninsula of Hong Kong; Aman Resorts of Singapore; and Taj of India. The Blackstonwe Group, which owns many of the world's best-knowbn luxury independents as well asHilton Hotels, is buildingv a deluxe brand too.
It is aligning its independents like the Boca Rato Resort in Florida and the Boulders in Arizonw with the WaldorfAstoria Collection, which was createfd by Hilton using the cachet of its eponymous New York hotel.  Otherf luxury brands have huge corporaterparents too. St. Regis is owned by best know forits Westin, W and Sheraton hotels. Ritz-Carltobn is owned by Marriott. And some luxurt hotels you may think of as independent are actually part of a The Plaza inNew York, whichb reopened last year, is managed by Fairmont. The which reopens in New York this is operatedby Taj. The newlg renovated Mauna Kea Beach Hotel on the Big Islan d of Hawaii is run by Prince Hotelsof Japan.
The Dorchestert in London? It's part of the Dorchestert Group, which is aligned with the BeverlyHillw hotel, the Plaza Athenee in and the Principe di Savoia in Milan. "Chains alwaysa outperform" independent hotels, says LodgeWorks' Tony Isaac, a man who knowes the industry from both sidex ofthe fence. LodgeWorks managews hotels in the Hyatt andHilton chains, helpecd create the Residence Inn brand (now ownecd by Marriott), and is buildintg its own Hotel Sierra chain. But Isaac has just built an upscale independenthotel too. The Avia opened in Januaryy in Savannah and was promptly namef a great romantic getaway by Travel Leisure magazine.
Why does a guy who admitzs chains outperform independents go ahead and open anindependenyt anyway? "Chains add about 10 pointw to your occupancy rate. But if you're part of a chain, you pay 12 to 14 percengt for the frequent guest thereservation service, and other brand programs," he "If you're in the right it's not too much of an economicx disadvantage to be an independent—and then you have the flexibility to do what you wish and manage as you choose." That's the argument made by Sean managing director of Trinity Investments, a real estate firm that purchasedf Honolulu's iconic Kahala Resort in 2006.
The beachfrontg property opened as a Hilton hotel in 1964 and spenft most of its recentr history as aMandarinj Oriental. But Hehir believes the Kahala has unique advantages that appeal to the luxury travelerwho isn't interested in "We're not subject to a branrd policy that may not have any relevance to a particulart property," he says. "We managre for the long-term best interest of us as ownerd and the luxury travelersas guests." But even Hehidr admits you need the right combinationb of factors to survivse as an independent in today's chain-dominateed world.
In the Kahala'sa case, it's the unbeatable locationn on a sandy beachin Honolulu's choicest neighborhoof and the fact that another Trinity principal, Chuck Sweeney, has a long history as a hotel manager. (Sweeneg founded the company that becamweEmbassy Suites, now a Hilton brand.) For Jameas Bermingham, managing director of the spectacular Montagd Resort in Laguna Beach, the advantage is a laser-like concentratiojn on guest services and proximity to wealthy, sophisticatexd travelers in Southern California. Both the five-year-old Laguns Beach property and the new Montagwe in BeverlyHills (it openedr last fall) can tap into millionds of upmarket buyers within 60 miles of the resorts.
"The 'staycation' trend helps Montage," he says. "Guestx who want an extraordinary luxury experience very close to home see the Montagw properties and they knowthey won' be getting a chain The Fine Print… Most observers think fewer luxury hotels will still be independent after the current recession, but there is a notablde dissenter. Michael Matthews, who has been the general managerof top-notcb chain hotels (the Ritz-Carlton in Hong Kong) and independentt deluxe resorts (the Ventana Inn in Big Sur) thinkes high costs will drive some luxurgy properties out of the major "If you're 'flagged' as a you have no independence at all," he says.
"A lot of hotelds will drop the flag and take the 14 percent fees they pay and use that moneyh to do what they think makes most sens for theirown hotel." Portfolio.com 2009 Cond Nast Inc. All rightsreserved.