Bethesda, MD – Gaylord Entertainment will turn over its brand and the management of its four convention resorts to Marriott International under a $210 million agreement that will go into effect next year. Under the agreement, which must be approved by Gaylord stockholders in August, Gaylord Entertainment will continue to own the four hotels while Marriott will run them for an initial term of 35 years.
The Gaylord hotel portfolio includes approximately 2 million square feet of event space and 7,800 hotel rooms at four locations in Nashville and in the suburbs of Orlando, Dallas and Washington, DC. The resorts are marketed to events that may not require a major convention center and prefer a self-contained venue offering hotel rooms, meeting rooms and recreation.
Gaylord Chairman and CEO Colin Reed said his company surveyed 400 meeting planners in February about their preferences for venues. “Gaylord ranked first in ‘all under-one-roof’ offerings and amenities, and Marriott was ranked the No. 1 preferred group destination provider overall due to its service standards and wide distribution,” he said.
Reed and Marriott executives said Gaylord’s properties would benefit from the economies of scale and the administrative and marketing capabilities that Marriott provides. “With their large sales force and unique benefits, such as the Marriott Rewards program, we also expect that they will be able to drive additional transient demand at our properties,” Reed said.
Gaylord will also enjoy some tax advantages from its new status as a real estate investment trust (REIT) owner effective January 1, 2013.
The agreement should also provide a boost for Marriott’s convention business. Marriott will also be in line for an incentive fee following its first year of ownership as well as a regular 2% management fee.
Colorado Project Halted
It was also announced that because of the pending transaction with Marriott, Gaylord was shelving its plans to build a fifth resort in Aurora, CO. Gaylord said it would “adjust” its approach to the Denver-area property due to its pending REIT status.
“The company 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,” Gaylord said in its announcement. “The company will re-examine how the project could be completed with minimal financial commitment by Gaylord during the development phase.”
Reach Colin Reed at 615-316-6000 or firstname.lastname@example.org