|By Dale Kasler, The Sacramento Bee,
Calif.McClatchy-Tribune Regional News
June 04, 2011--The Ritz-Carlton at Lake Tahoe is headed toward foreclosure, burdened by a weak economy and an outsized debt.
While the luxury hotel won't shut down, the pending foreclosure sale is a vivid symbol of the troubles that continue to plague the Tahoe economy. The Ritz is considered the swankiest hotel in the region; rooms generally start at $249 a night.
The Ritz's developer defaulted on its bank loans just a few months after the hotel opened in 2009. Even though Ritz has continued to manage the hotel, the property has been under the control of a court-appointed receiver.
"When the economy turned ... the business wasn't there to support the level of debt that was there on the hotel," said Jim Telling, a partner in the hotel's original developer, East West Resort Development of Avon, Colo.
Bank of America, which represents a group of lenders to the Northstar-area hotel, filed a default notice in March 2010. On Friday the bank said it was proceeding with a foreclosure sale June 27.
Despite the foreclosure, the hotel will remain open under Ritz's management, said bank spokesman Bill Haldin.
"We're business as usual," said hotel spokesman Steven Holt. He said the Ritz has a 25-year management agreement that "supersedes any transfer of ownership."
Holt said business at the Ritz has been strong recently.
"With the snowpack up here, we really had a great winter," he said.
Tom Morone, the court-appointed receiver, said the Ritz is still unprofitable, but that's not unusual for a relatively new hotel. "They've ramped up their business nicely," but the hotel started off with too much debt, he said. The foreclosure notice says lenders are owed nearly $165 million.
The overall Tahoe tourist trade has been particularly hard hit by the weak economy and growing competition from Northern California's Indian casinos.
East West Resort, which has built hundreds of condos and townhomes around Northstar, has struggled more than most. Besides losing the Ritz, the developer was forced to place nearly $1 billion worth of Northstar real estate into Chapter 11 bankruptcy reorganization last year.
The bankruptcy case has concluded, and Telling said East West was able to retain some of its properties, including the Old Greenwood and Gray's Crossing golf courses.
Call The Bee's Dale Kasler, (916) 321-1066.
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