|By Andrea L. Stape, The Providence Journal, R.I.|
Knight Ridder/Tribune Business News
Nov. 24, 2004 - PROVIDENCE, R.I. -- Fifteen international, national and local companies have officially offered to buy the state-owned Westin Providence and build a new hotel tower next to it.
The Rhode Island Convention Center Authority, which oversees the Westin, put the four-star hotel on the market in September. The authority started officially considering the bids yesterday during a closed session of its monthly board meeting.
The names of the suitors have not been released to the public. The authority doesn't want to lose any negotiating advantages by telling the companies who they are vying against for the hotel, according to James McCarvill, executive director of the Convention Center Authority.
According to the state's Open Meetings Law, public bodies can close discussions about the "disposition of publicly held property wherein advanced public information would be detrimental to the interest of the public."
"We just don't want to do anything to influence the sales process," said McCarvill. "We're trying to deal with a piece of real estate, confidentiality is in our best interest and therefore in the best interest of the public."
With the assistance of Pinnacle-Realty Investments, a Boston hotel adviser the board hired last month, the authority cut the list of bidders in half yesterday, said McCarvill. It then asked the semifinalists to submit clarified proposals by mid-December, he said. The authority has asked bidders to make their offers as attractive as possible, added McCarvill, who declined to release a potential sale price for the hotel.
The Convention Center Authority is set to meet again on Dec. 22, when it will review the updated plans. It may select a buyer during that meeting, said McCarvill.
If a buyer is chosen for the Westin, the winner will be required to build a 200-room tower next to the hotel. In addition, the buyer must agree to reserve a certain number of rooms that can be rented by people attending conventions, according to the authority.
The buyer will also be required to honor the hotel's union contract and keep the existing hotel employees. The union contract expires in October 2005.
"The union perspective was acknowledged in all the discussions and (in) all the bids received," said Matt Kenney, with Pinnacle-Realty.
This summer, RLJ Development, which owns the Courtyard Marriott across the street from the Westin, and Carpionato Properties Inc. of Johnston each said they were interested in buying the Westin. Neither company returned calls for comment yesterday.
The authority must also offer Starwood Worldwide Hotels & Resorts the chance to place a bid on the hotel. Starwood is currently contracted to manage and run the hotel, and until its contract expires in May, Starwood is allowed to counter any hotel bid, McCarvill said.
But just because the authority is entertaining bids doesn't mean it will sell the state-owned hotel. Currently, the state owes about $285 million on the hotel and the convention center. In the early 1990s, the state issued $354 million worth of bonds to build the two facilities. Profit from the hotel, which had a net income of $8.9 million in fiscal 2004, is used to service the debt each year. In addition, the state spends $17 million a year subsidizing the hotel and the center.
Selling the Westin alone might not generate enough money to pay off all the outstanding bonds, said McCarvill. And that's why the authority is requiring potential buyers to build the 200-room tower next door, he said. The additional room and income taxes will ensure that the state has additional revenue to help pay down any remaining debt, he explained.
Also, the authority is eager to establish more hotel rooms in Providence. More rooms, it says, will allow the convention center to book much larger conventions and meetings.
"It goes back to the original intent -- we were interested in selling at a good price with an ironclad commitment to develop the additional rooms," said McCarvill.
The Convention Center Authority's board consists of David Duffy, chairman; George Nee, vice chairman; Joseph Judge, treasurer; Paul MacDonald, secretary; Brad Waugh; Dave Gavitt; Dale Venturini; and Gerald Massa.
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