MYRTLE BEACH, S.C. (April 26, 2005) -- Attorneys are hammering out the final legal details to allow Sheraton to take over operation of the Myrtle Beach Convention Center hotel.
The Hotel Board Corp., which tapped Sheraton on April 1 to replace Radisson, approved an 11-page term sheet Friday that will lead to a final contract. The board and City Council also must OK that 10-year agreement.
Sheraton aims to take over in June, with officials pushing for the changeover to be finished by June 1.
"We are still shooting for that," said Walt Standish, chairman of the Hotel Board, which oversees the hotel for the city. "Given the dynamics of Myrtle Beach, the first of June is a lot easier to do than the first of July."
The board and Radisson agreed to part ways after a contentious, two-year partnership marked by a bond default and missed financial marks. The hotel ended its budget year March 31 with earnings off projections by about $1.5 million.
Despite the shortfall, the city was able to make the nearly $1.5 million bond payment that was due April 1. Last year, the city refinanced $47.7 million in hotel bonds to ease the immediate financial burden.
The city likely will have to step up again at the end of this year to cover the shortfalls, infusing as much as $5 million into the hotel in coming years.
Officials selected Sheraton over Hyatt and a group of local hoteliers who emerged later in the process.
Officials said they preferred Sheraton because it made concessions that protected the city. Specifically, some fee payments to Sheraton won't be made unless there are enough revenues to cover the debt payments.
The term sheet covers conversion costs, fees that will be paid to Sheraton, reasons for termination, booking policy and other issues.
Sheraton is lending $2 million to the hotel corporation to pay back Radisson for its initial investment.
Sheraton will forgive $1 million of the loan after 10 years. The other half will not accrue interest.
Sheraton will lend the corporation about $950,000 to switch names and convert the property to Sheraton standards.
Sheraton is part of Starwood Hotels & Resorts Worldwide, which operates properties under the names Sheraton, Four Points Sheraton, St. Regis, Luxury Collection, W and Westin.
The company has a time share resort in Myrtle Beach, Sheraton's Broadway Plantation off Robert M. Grissom Parkway. It used to have a Four Points Sheraton on the oceanfront, but it closed last year.
"We've been looking to get back in the market," said Jim Alderman, a Starwood senior vice president.
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|Also See:||Myrtle Beach, S.C., hotel board chooses Sheraton (The Sun News, Myrtle Beach, S.C.) / April 2005|
|Sheraton Edges Past Hyatt as Likely Next Operator of the Struggling Myrtle Beach Convention Center Hotel / April 2005|