|By Tom Daykin, Milwaukee Journal
SentinelMcClatchy-Tribune Regional News
March 25, 2011--Sheboygan's Blue Harbor Resort, a longstanding drag on the earnings of its original owner, Great Wolf Resorts Inc., has been sold to a joint venture that will make changes to "refresh" the lakefront property.
Madison-based Great Wolf announced the sale of the 182-room resort Thursday to Claremont New Frontier Resort LLC for $4.2 million.
Claremont New Frontier was formed by two privately held companies: Wheeling, Ill.-based New Frontiers Capital LLC and Bridgewater, Mass.-based Claremont Cos.
Great Wolf, which operates 11 Great Wolf water park resorts in Wisconsin and elsewhere, opened Blue Harbor in 2004 at a cost of $54 million.
Blue Harbor drew fewer guests than expected, which the company blamed on a slower than expected development of Sheboygan as a tourist destination.
The family-oriented water park resort includes a conference center, which can accommodate up to 1,000 people. But efforts to draw weekday business travelers also fell short, with Blue Harbor lacking the name recognition enjoyed by major chains, such as Hilton and Marriott.
The new owners have no plans to sign a national franchise agreement.
However, New Frontier and Claremont will remodel the rooms, starting this spring, and the lobby, starting this fall, said Randy Dzierzawski, New Frontiers Capital president. The new owners also plan to makes changes to the outdoor pool area, including the addition of a tiki bar, he said.
Those changes, to be completed by next year, will help Blue Harbor draw vacationers and business travelers seeking a "sophisticated lakeside experience," Dzierzawski said.
"We want to make it into a destination that gets beyond the family water park experience," he said.
As part of the transaction, Great Wolf paid $2.5 million to the City of Sheboygan. That payment relieves the company of all obligations under its original agreements with the city, which consisted of minimum guaranteed amounts of room tax payments through 2028, and real and personal property tax payments through 2018.
The carrying value of those minium obligations was $11.6 million as of Dec. 31, with that debt now taken off Great Wolf's balance sheet.
The city provided $12 million to help finance Blue Harbor as part of an effort to convert a former lakefront industrial area into a tourism draw, including Blue Harbor, new shops, a family entertainment center and vacation condos.
Blue Harbor's sale is part of Great Wolf's strategy to increase its "financial flexibility," and focus on management and licensing agreements instead of directly owning resorts, said Chief Executive Officer Kim Schaefer, in a statement.
Great Wolf's stock closed up 18 cents, or 8.7%, at $2.26 after the sale was announced.
Claremont and its affiliates own and operate three hotels in the United States. The company has invested, developed or operated nine hotels during the past 20 years under the Marriott Residence Inn, Marriott Courtyard, Marriott Spring Hill Suites, Hampton Inn and Hilton Garden Inn brands.
New Frontiers Capital is part of the Forsythe Group of companies, and is owned by Gerald R. Forsythe.
In the hospitality segment, New Frontiers Capital co-owns and operates the Mountain Grand Lodge & Spa and Avalanche Bay Indoor Waterpark, in Boyne Falls, Mich., and owns Garland Lodge & Resort, in Lewiston, Mich.
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Copyright (c) 2011, Milwaukee Journal Sentinel
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