Rosewood's Europe growth marred by Baha Mar trouble

Rosewood Hotels & Resorts finds itself in an enviable position after acquiring a property in Amsterdam. It's across the pond that is the trouble.

In Amsterdam, Rosewood has acquired the former Palace of Justice at the corner of the Prinsengracht and Leidsegracht canals. The 215,000-square-foot former Palace of Justice will be converted to the first Rosewood hotel in the Dutch capital. 

The Dutch government was looking for a buyer of the Palace of Justice since last year when a new Justice facility opened near the waterfront in Amsterdam. After controversy about the initial highest bidder, Rosewood Hotels managed to buy the property for €61.3 million. No opening date has been announced as of yet.

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This is the latest European development from Rosewood. Since Hong Kong-based New World Hospitality added the company to its portfolio in 2011, the small chain of ultra-luxury hotels has committed to accelerated international expansion. The Rosewood Amsterdam is the fourth European Rosewood hotel following the Rosewood London, Rosewood Tuscany and the Rosewood Paris, which is opening next year. The Rosewood Edinburgh has just been announced for 2018 in the former Royal High School, a landmark building on Calton Hill in the center of the Scottish capital. 

Bahamian trouble
The success in Europe is juxtaposed against porblems in the Bahamas, where a Rosewood hotel was slated to be a major component of the massive Baha Mar development that has since filed for Chapter 11 bankruptcy. Late last month, Rosewood filed a motion in a Delaware bankruptcy court asking to be excluded from a freeze on actions against Baha Mar Ltd. offered by Chapter 11 protections.

According to Global Construction Review, Rosewood specifically argued that the developer did not have enough money to uphold its obligations under the contract, and that it did not own the land the resort is built on.

Court documents published in Bahamas paper Tribune 242 claimed that because Baha Mar "failed to perform is obligations under the hotel agreements," and the developer has "no ability to cure such defaults," there is cause for the Delaware Court to modify the automatic stay to permit Rosewood to terminate the Rosewood Hotel Agreements in accordance with their terms.

"Similar radius restrictions on Rosewood’s ability to manage hotels in The Bahamas exist under the Hotel Management Agreement while that agreement is in effect," Rosewood reportedly told the court. "Suffering such restrictions while Baha Mar is hopelessly in default under the Rosewood Hotel Agreements further diminishes the value of the Rosewood brand and otherwise prejudices Rosewood because, at the same time Rosewood is not profiting from its relationship with Baha Mar as a result of Baha Mar’s failure to perform and other incurable defaults, Rosewood is prohibited from exploiting the Rosewood marks elsewhere in The Bahamas.

"Therefore, Rosewood is now suffering, and will suffer additional irreparable harm if it is not permitted to terminate the Rosewood Hotel Agreements and be relieved of its association with Baha Mar."

Later this week, Hotel Management will take a closer look at Baha Mar's trouble and why smart planning at the outset is a must to avoiding problems down the road.

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