Upon last year's May announcement that Gaylord Entertainment had agreed to sell its Gaylord Hotels brand and the rights to manage its four hotels to Marriott International for $210 million in cash, and reorganize its hotel unit as a real estate investment trust, a plan was scrapped to move forward with a project for a conference hotel in Aurora, Colo.
However, nearly a year later, that project appears to be back on track, as The Denver Post reports. Breathing new life into is Houston-based Rida Development Corp., which will develop the 1,500-room Gaylord Aurora convention hotel.
Aurora officials told the Colorado Economic Development Commission on Thursday that Area Property Partners of New York will arrange financing for the $824-million project.
"We never gave up," Wendy Mitchell, president and CEO of the Aurora Economic Development Council, told The Denver Post.
Marriott, too, will manage the property, was reportedly instrumental in getting the project going again.
Rida and Area are also developing a $350-million, 1,000-room hotel in Houston that will operate as a Marriott Marquis. They also financed and built the 1,400-room Hilton Orlando and renovated a 1,200-room Hyatt Regency in New Orleans after Hurricane Katrina.
"They are both strong companies, plus coupled with Marriott, it makes a good three-part team to move the project forward," said Kenneth Free, owner of Straightline Advisors, which provides consulting services on developing hospitality real estate.
Having said that, there are risks involved. Colorado is much more seasonal than the other markets where Gaylord operates, and the Aurora site isn't a prime destination, The Denver Post notes. The new hotel also risks draining convention business from existing properties, Free cautioned.
In fact, the Downtown Denver Partnership last year opposed the Gaylord project, saying that heavy public incentives gave it an unfair advantage and citing a study that said about a third of its business would come from existing hotels. The partnership said Thursday it hasn't changed its position.
Aurora Mayor Steve Hogan said the development will bring in visitors who wouldn't have otherwise come and that it represents an asset not just to Aurora but to the entire region. "It brings new business. It is not recycling old business," he said.
Lee Neibart, CEO of Area Property Managers in New York, said the region lacks and needs a convention hotel on the scale Gaylord is proposing, one reason his firm has become involved.
The Denver Post noted that institutional investors are running out of existing developments to put their money into and are looking for new, large projects that have the potential to earn a higher yield for them, Free said. "The market is very aggressive in the availability of debt capital," Neibart said.