|By Dawn Bryant, The Sun News, Myrtle Beach, S.C.|
Knight Ridder/Tribune Business News
Jul. 14, 2005 - Negotiations continue with the company that plans to operate the city-financed hotel at the Myrtle Beach Convention Center, with an October switchover anticipated.
City Council and bond attorneys must approve the contract before Interstate Hotels & Resorts takes over operation of the 2½-year-old hotel. It will run the hotel as a Sheraton.
Consultants and attorneys for the city's Hotel Board Corp. are negotiating with Interstate and Starwood Hotels & Resorts, which will lend its Sheraton brand to the project. Starwood had intended to take over the hotel itself, but negotiations fell apart in May after the company wouldn't accept an S.C. liability clause.
Interstate, one of Starwood's largest franchisees, then entered the picture. Interstate is a publicly traded company that has a portfolio of 68,000 rooms, including 23 Sheratons and six convention center hotels. Starwood's franchise approval committee will consider the project Tuesday, consultant Jeff Sachs said.
The deal is on track, he told the Hotel Board Corp. on Wednesday.
"There appears to be no material issues out there," Sachs said. "It's more dotting i's and crossing t's."
Locals started searching for a new operator in March after Radisson and the city agreed to part ways after ongoing financial clashes. Since opening in January 2003, the city has had to refinance $48 million in hotel bonds and set aside nearly $580,000 to cover hotel shortfalls expected in the next 12 months.
The hotel is supposed to generate enough revenue to pay the debt. It was one of the first in the country to use public financing for a hotel that would be operated by a private company.
Radisson will get back the $2 million it invested into the project initially.
Under the proposed deal with Starwood and Interstate, each will put up $1 million to pay Radisson. Interstate also plans to lend the Hotel Board up to $905,000 to switch the hotel from Radisson materials to Sheraton items.
Once officials sign the termination with Radisson, they will have about two months to switch to Interstate. The timing is important because the Hotel Board doesn't have the money to pay back Radisson until it finalizes the deal with Interstate and Starwood.
"We need to be sure we do not get caught in that trap," said Walt Standish, the Hotel Board's chairman.
The Hotel Board aims to approve the contracts at its next meeting July 27.
"Each week we feel like we are getting closer," Standish said.
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