|By Dale Kasler, The Sacramento Bee,
Calif.McClatchy-Tribune Regional News
July 26, 2011--The foreclosure at the Ritz-Carlton luxury hotel is the latest sign of economic distress in the Sierra resort industry.
A group of banks took ownership of the hotel Monday after the developer of the Ritz defaulted on a $165 million loan last year. The property will continue to operate as the Ritz under a 25-year management contract.
Opening to great fanfare in late 2009, the Northstar Ritz quickly fell victim to the recessionary climate that enveloped California and the tourism industry.
Ritz officials have said occupancy has been strong, but even with rooms starting at $249 a night the hotel was unable to keep up with its debt payments. The developer, East West Resort Development of Avon, Colo., defaulted on its loan in March 2010.
In a separate move, East West also put more than $900 million worth of Northstar-area real estate into bankruptcy.
With Monday's foreclosure sale, the Ritz became the property of a lender consortium led by Bank of America. The foreclosure "does not impact the operations of the Ritz-Carlton," said Bank of America spokesman Bill Halldin.
Carl Ribaudo, a Lake Tahoe resort consultant, said multiple Sierra developers were caught short-handed when the economy went south and their financial projections were rendered meaningless.
These projects were conceived "on a pro forma from a different era," he said.
In late June, the owner of the 40-year-old Royal Gorge Cross-Country Ski Resort defaulted on a $16.7 million loan -- a possible precursor to foreclosure.
The owner, a Bay Area developer, bought the resort six years ago with the idea of building more than 900 residential units on the site.
Even though travel to the Sierra region has rebounded somewhat, visitors are choosing less-expensive hotels, curtailing their stays and generally scaling back.
"If they do stay someplace, they're there on a deal," said Ribaudo, president of Strategic Marketing Group in South Lake Tahoe. "The economy's still challenging in California."
He noted that one big South Lake Tahoe development has been stalled for nearly four years: the Chateau at Heavenly Village, a proposed $400 million convention center and hotel on Highway 50 near the base of the Heavenly ski gondola.
The developer filed for Chapter 11 bankruptcy protection in 2009.
Call The Bee's Dale Kasler, (916) 321-1066.
-- Read more articles by Dale Kasler
To see more of The Sacramento Bee, or to subscribe to the newspaper, go to http://www.sacbee.com/.
Copyright (c) 2011, The Sacramento Bee, Calif.
Distributed by McClatchy-Tribune Information Services. For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com.