Cutbacks in special events hurting hotels
Big St. Louis hotels that depend on corporate meetings and charity events for much of their business will face a lean winter and are unlikely to recover fully until 2011, a hotel analyst said Monday.
Among them is the Chase Park Plaza, the Central West End landmark that is falling short of income projections made in 2006, when real estate investment trust Behringer Harvard took over as majority owner. The $180-million deal included $95 million for an ongoing renovation.
In a conference call script attached to a quarterly financial filing last week, Behringer Harvard’s chief accounting officer Bryan Sinclair said the firm had "recognized" a $5 million reserve for an unpaid rent balance from its 5 percent partner, Kingsdell LP, which runs the Chase Park Plaza.
Kingsdell’s owner, Jim Smith, said Monday that hotel revenue is short of the projections but added that Behringer Harvard’s action is no indication the Chase Park Plaza is in financial trouble.
"The lease payments are just internal cash flow," he said. "We are 100 percent current on our debt payments. We pay all our taxes."
The complex at Kingshighway and Lindell Boulevard is comprised of 350 hotel rooms, 51 corporate apartments, 86 condominiums, meeting rooms, restaurants and a movie theater. The $4.5 million penthouse condo remains unsold but 65 percent of the condos have been purchased, Smith said.
He would not provide hotel occupancy rates but said the economic downturn and renovation of some hotel rooms had pushed down the rate. But Smith added that next year the owners will pay off the construction loan on the condo portion of the complex and "significantly pay down" the hotel loan.
Hotel analyst Gary Andreas, a partner at H&H Financial in Chesterfield, said the Chase Park Plaza is among area hotels hurting from reductions in corporate meetings.
"And a lot of charitable groups have cut back on fancy functions," he added.
Andreas said big hotels are unlikely to see a significant turnaround until late next year. Hotels in most cities, including St. Louis, look to return to normal in 2011. Chase Park Plaza appears to be performing as well as its competitors, he added.
"I’ve not heard any rumbling that they’re in trouble," Andreas said.