Saturday, May 28, 2011

Montelucia Resort and Spa has better outlook under new ownership

Montelucia Resort and Spa in Paradise Valley
Montelucia The Montelucia Resort and Spa in Paradise Valley is less than 3 years old but has already had three owners. Its new owners do bring experience in dealing with the Phoenix luxury-hotel market: They owned the Biltmore from 2000 to 2004.

The Montelucia Resort and Spa, still less than 3 years old, has changed hands for the third time.

The buyer is no newcomer to the metro Phoenix luxury-hotel market. KSL Capital Partners LLC, a Denver-based private-equity firm specializing in travel and leisure enterprises, owned the Arizona Biltmore from 2000 to 2004.

The purchase price: $105 million, including $12.6 million in hotel furnishings, according to an affidavit of property value provided by Ion Data, a real-estate analysis firm.

The transaction marks the end of a turbulent financial history for the resort in Paradise Valley. The resort's previous owner, Eurohypo AG, was the original lender for Crown Realty & Development Inc. but became the resort's owner when the developer defaulted on a $180 million loan.

Until Friday, the German bank owned the resort and InterContinental Hotels and Resorts managed the property.

"When you go through a developer who leaves the project, and then you go through a foreclosure process and are bank-owned, there's nothing really comforting about that from a long-range standpoint," said Greg Hanss, the resort's director of sales and marketing. "This certainly brings an end to that uncertainty."

In addition to the new ownership group, KSL's management arm, KSL Resorts, has replaced InterContinental as the property's management company. But even though the property no longer will be branded as an InterContinental, KSL and InterContinental will continue to collaborate.

The Montelucia will be an InterContinental Alliance Resort, meaning KSL Resorts will still have access to InterContinental's global-reservations system and marketing channels. The Montelucia will also remain part of InterContinental's loyalty-rewards program.

"Everything that InterContinental has done since their inception here, we can build upon that and then share resources," said Matthew Hart, new vice president and managing director at the Montelucia.

"And now we have twice as many sales resources, so we should run 102 percent occupancy next year," he joked.

In the coming months, Hart will look to diversify the hotel's revenue by catering not only to its guests but to the surrounding community.

"On the broadest level, we wanted to be back in the Scottsdale-Phoenix area because of our heritage," Hart said. "We'd been here before, and we know the dynamics of this market."

A bevy of clubs

The Montelucia will partner with ClubCorp, a sister company of KSL Resorts that owns or operates a network of more than 150 golf and country clubs, business clubs, sports clubs and alumni clubs.

ClubCorp members will have access to the Montelucia's amenities, such as Joya Spa.

"It's really about getting an asset in the right ZIP code, knowing that the people within a 20-minute drive might be interested in coming to a resort," Hart said.

Bill Murney, senior vice president at HREC Investment Advisors, said the purchase of Montelucia also illustrated a larger trend: a pickup in the number of hotel transactions that have occurred within the past 12 months.

Last week, Murney, representing FelCore Lodging Trust, finalized the sale of Embassy Suites Phoenix-Tempe, at U.S. 60 and Rural Road in Tempe. In February, he brokered the Hotel Theodore sale in Scottsdale.

"I really think that one of the things that helps drive people's confidence in doing transactions in the market is seeing that it has bottomed out," Murney said. "The (room) rate improvement that we saw in the first quarter of this year was that indication."

by Megan Neighbor The Arizona Republic May. 25, 2011 12:00 AM

Montelucia Resort and Spa has better outlook under new ownership

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