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Hilton Head Island's Landmark, the Westin Resort,
Acquired by Starwood Capital for $73.4 million
By Peter Hull, The Island Packet, Hilton Head Island, S.C.
Knight Ridder/Tribune Business News

Apr. 8, 2005 - One of Hilton Head Island's landmark hotels, the Westin Resort in Port Royal Resort, has been sold for the first time since 1988.

Starwood Capital, the investment arm of Starwood Hotels and Resorts, paid $73.4 million for the island's second-largest hotel, built 20 years ago.

The 412-room hotel has been under a management contract with Starwood since the Phoenix-based company bought the Westin resorts brand from Caesar Park Hotels and Resorts in 1997.

Originally a Hotel Inter-Continental, the property was sold to Japanese construction giant Aoki Corp. in 1988 and became a Westin hotel. Caesar Park, the U.S. holding company created by Aoki, then sold the Westin brand to Starwood but kept seven hotels -- five in Canada, one in Tucson, Ariz., and the hotel on Hilton Head.

When Caesar Park put its remaining Westin portfolio up for sale, Starwood stepped in and bought them all, said Kim Chappell, Westin Resort Hilton Head general manager. He said operations will not be affected.

The Westin Resort has 25,400 square feet of conference space in 16 meeting rooms, including a 13,200-square-foot grand ballroom and two executive boardrooms.

The hotel spent more than $3 million last year to revamp all of its guest rooms and build a pavilion and outdoor banquet deck for 300 guests. This winter, the hotel spent $400,000 to upgrade the fitness center and indoor swimming pool. Plans also call for a health spa.

The sale will not involve a name change, Chappell said, nor will staff levels and services at the hotel be affected.

Starwood hotels also include the brands Sheraton, St. Regis, W Hotels and Four Points by Sheraton. The company has 738 hotels, with approximately 229,000 rooms in 82 countries, according to company filings with the Securities and Exchange Commission.

The island's largest hotel is the nearby 512-room Marriott Beach and Golf Resort, which spent about $5 million this winter upgrading Internet service and creating a 5,500-square-foot junior ballroom after relocating its gift shop. The Marriott already has a 17,600-square-foot main ballroom as part of the hotel's 43,000-square-foot meeting and convention space. The company spent about $22 million renovating the hotel when it took over management in 2001.

The Westin sale comes a year after island hotels enjoyed their best year since the Sept. 11, 2001, terrorist attacks. Occupancy at area hotels increased from 58.8 percent in 2003 to 60.4 percent last year, up 2.7 percentage points, according to data from the Hilton Head Island-Bluffton Chamber of Commerce.

At the same time, average room rates on Hilton Head increased 2.7 percent last year, from $109 in 2003 to $112 in 2004.

The Hotel Inter-Continental was built at a cost of $55 million in 1985. It originally was owned by the Barony Co., a partnership that included Robinson Humphrey/American Express and a group of Netherlands Antilles investors.

Hotel Inter-Continental had a contract to manage the resort that ended in court when the partnership sought to end the contract, charging Inter-Continental with mismanagement that cost the owners $5 million. As Barony readied to sell the hotel to Aoki, Inter-Continental argued that if the hotel was sold and a new management company brought in, jobs would be lost.

The courts sided with Barony, and the flag was changed from Inter-Continental to Westin.


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Copyright (c) 2005, The Island Packet, Hilton Head Island, S.C.

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