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Ongoing Dispute Over Union Labor Contracts, the Recession Prompts The Fabled Greenbrier Resort
 in West Virginia to Declare Bankruptcy; Expected Sale to Marriott Contingent
 on Renogotiated Labor Contracts


By Emily C. Dooley, Richmond Times-Dispatch, Va.McClatchy-Tribune Regional News

March 20, 2009 - An ongoing dispute over union labor contracts, the recession and a drop-off in the luxury hotel market prompted a fabled West Virginia resort to declare bankruptcy yesterday.

The Greenbrier Hotel Corp., owner of the four-star Greenbrier resort, also announced plans to sell itself to Marriott Hotel Services Inc.

Founded in 1778, the Greenbrier is a national historic landmark and has hosted 26 presidents, royalty and countless dignitaries over the years. From the 1950s to the 1990s, it was home to a secret emergency relocation bunker equipped to house members of Congress.

But in recent years the 721-room resort, which has 10 lobbies and three golf courses, has struggled financially. The Greenbrier lost more than $90 million in the past six years, including $37 million in 2008, said Lynn Swann, Greenbrier's director of public relations.

"We simply cannot continue to operate with such staggering deficits," Swann said. "These actions are being done to ensure the future viability of the resort."

In U.S. Bankruptcy Court in Richmond yesterday, attorneys for the resort asked for access to bank accounts, authorization to continue paying employee wages and benefits, as well as approval for $19 million in financing to continue operations. The requests all were approved by Judge Kevin R. Huennekens.

At its peak, the Greenbrier employs about 1,300 people, and last year the resort generated $450,000 in tax revenue for the Greenbrier County Convention and Visitors Bureau, Executive Director Kara Dense said.

"It's the economic engine of Greenbrier County," Dense said.

Under the agreement, Greenbrier owner CSX Corp. will provide up to $50 million over two years to operate the resort after the sale closes. Within seven years, Marriott will pay between $60 million and $130 million for the resort.

The sale amount will depend on Greenbrier's financial performance, court records show.

In court documents, Greenbrier listed assets of up to $100 million and liabilities of $125 million, $91 million of which is owed to CSX.

Greenbrier and its nine bargaining units have been at odds since late 2007, when the company and employees could not agree on new contracts.

A number of groups canceled reservations during the first half of 2008 out of fear that strikes would disrupt service, Swann said. In June, employees agreed to a ban on strikes or walk-outs, and employees have worked without a contract.

In its petition, the resort claims that the hotel spends 70 cents of every dollar earned on salary and wage benefits and that it will seek a reduction in those expenses.

The average spent on employee wages and benefits in the industry is 32 cents per dollar earned, according to the American Hotel & Lodging Association.

The Greenbrier is often compared to the Homestead, another historic resort about 40 miles away in Bath County, Va. Homestead and industry officials declined to comment on what effect the Greenbrier developments might have on the Homestead.

New contracts will be given to the bargaining units.
 
If talks do not produce an agreement, the company will ask to void the agreements, which is allowed in bankruptcy, Greenbrier Hotel Corp. Chief Financial Officer Michael McGovern said in an affidavit.

Union officials declined to comment. "The union must rely on legal advice before any action can be taken or further comment made," union spokesman Peter E. Bostic said in a prepared statement.

The sale is expected to close in June. But Marriott will not approve the sale if labor contracts are not signed, said John Wolf, senior director of public relations for Marriott International Inc.

If an agreement is reached, the hotel chain expects the deal to close by the end of the year, Wolf said.

"We're optimistic and very hopeful that the union and management . . . can come up with an agreement that will please Marriott and that deal can go forward," Dense said. "We're hoping that this one will have a happy ending." ------

Contact Emily C. Dooley at (804) 649-6016 or edooley@timesdispatch.com.

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Copyright (c) 2009, Richmond Times-Dispatch, Va.

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