[Sam Maryland]

And yet an out of the way Sand Hills or Bandon would be a good model?

I don't think its the location.  I think its the hotel cost, or maybe that the place has just fallen off the map a little, compared to Pinehurst which has marketed via the US Open. Last big event at the Greenbriar was the '79 Ryder Cup.  They probably brought Lester in to restore the course for some marketing pop.  JN did a redo earlier.

If they lose $35M and have even 40% occupancy in 700 rooms at $300 a night......they must be taking in at least $30M, so the ops cost must be about $65M, which just seems like a lot. Of course, the CSX has owned if forever, and those numbers presume the original cost is long paid for, but maybe they re-fied several times for upgrades.

I think a big wildcard is how much corporate overhead CSX is assigning to the Greenbrier, could be a ton.

[john_stiles]

The Greenbrier also did a $50 million plus renovation of the resort interior.  The  interior renovation was very controversial in that design world, as the work of Dorothy Draper was totally redone.

"     The project will include the White Sulphur Springs resort's main dining room, the Tavern Room, Old White Lounge, main kitchen and about 65 guest rooms in the 93-year-old center section of the main building. "

And the resort also spent millions on the remodel of the former 'bunker' areas.

So the resort has some  'not insignificent' debt from all the recent re-modeling.

[PThomas]

The Greenbrier also did a $50 million plus renovation of the resort interior.  The  interior renovation was very controversial in that design world, as the work of Dorothy Draper was totally redone.

"     The project will include the White Sulphur Springs resort's main dining room, the Tavern Room, Old White Lounge, main kitchen and about 65 guest rooms in the 93-year-old center section of the main building. "

And the resort also spent millions on the remodel of the former 'bunker' areas.

So the resort has some  'not insignificent' debt from all the recent re-modeling.

think about it :  $50 MILLION dollars !!!!

and worse yet:  that is only ONE -TENTH of what Sea Island spent !

[Jim_Kennedy]

It seems that a sticking point between the union and the hotel is health care. I don't know the particulars, but the unions and the hotel have been working within the framework of no strike / no lockout agreement during '08, and they have agreed to do the same for '09.

What seems slightly devious is that hotel management 'led the charge' to  get gambling approved in 2000, but the measure failed at that time. In this go-round the workers pushed for gambling to be put on the ballot again, thinking the potential revenue would help save their jobs, and this time it passed. Now it seems that the hotel is not sure whether they'll bring tables to the resort.  Hmm.

[Lester George]

Jeff,

Alot of the problem stems from union contracts and labor.  In season, I think the Greenbrier employs in the area of 1,800 employees.  There are about 11 or 12 unions and the expenses are far outpacing the revenue. 

Since the days of Enron and others, stockholders are scrutinizing corporate "retreats" and outings much more. It used to be common for the resort to book numerous large groups (100 to 400) with very lavish entertainment. 

Now, the groups are much smaller and companies are trying to scale back their expenses.  That hurts the hotel.  Until the recent crash of the real estate market, development costs were being offset by sales of lots and homes. 

Last year that trend reversed itself and development cost have turned to debt that will be hard to repay until sales return.

Unless they institute the gambling, and negotiate better union (or bust them out) contracts, they are in for hard times.  The problem is you can't file for reorganization so easily unless the parent company (CSX) does.  It is definitely a tough spot. 

Lester

 

[Mike Hendren]

Lester,

I might be in the neighborhood within the next couple of weeks.  Is the Old White open for play in the winter?

Mike

[Lester George]

Michael,

It usually stays open but I would call ahead.  Talk to Robert Harris or Hill Herrick.

Lester

[Greg Tallman]

While I love table games, as a native West Virginian it seems almost criminal to have gambling at the Greenbrier.

[Buck Wolter]

$.27/Share   -- Unbelievable.


Railroad giant CSX Corp. said it will take a fourth-quarter non-cash charge of 27 cents a share, due to the economic baggage from the lavish Greenbrier resort it owns in West Virginia.

 
Associated Press
The lavish Greenbrier resort and spa in West Virginia, shown here in 2007, is the source of a noncash charge that CSX plans to take in the fourth quarter.
In a preliminary disclosure ahead of full financial results later this month, CSX said it earned 63 cents per share in the fourth quarter. Higher overall freight charges allowed CSX to post $2.7 billion in revenue, up 4% from the fourth quarter of 2007, despite falling demand for cargo from the automobile, construction, and other industries.

Not counting the charge for the Greenbrier, the money-losing Allegheny Mountain resort the company has owned since 1980, CSX said earnings for the quarter were about 90 cents per share, a 6% increase from a year ago.

CSX and other rail operators are grappling with plummeting freight volumes. Indeed, CSX -- the country's third-largest rail company, measured by revenues -- said that in light of the worsening economy, it would no longer be giving long-term earnings guidance.

Earlier this month CSX said it was examining strategic options for the Greenbrier. The resort, which has struggled as demand for luxury hospitality services has dropped, posted a $35 million loss in 2008 and a loss of more than $15 million in 2007. CSX has tapped Goldman Sachs & Co. to help figure out what to do with the resort, whose features include a massive bunker once meant to serve as a secret nuclear bomb shelter for members of Congress.

Compounding the general downturn in the travel business, CSX has also been entangled in a continuing labor dispute at the Greenbrier. Hotel employees have been operating without a contract for nearly a year as negotiations drag on.

The resort was purchased in 1910 by the Chesapeake & Ohio Railway, which eventually became part of CSX, based in Jacksonville, Fla.

The preliminary earnings came in below analysts forecasts of 98 cents per share, according to a mean estimate by Thomson Reuters. Shares of CSX were down 0.7% to $32 in after-hours trading, after closing down 6.7% in the regular session.

[Sam Maryland]

.27c hit to earnings implies a $165mm pre-tax write down assuming a 35% tax rate and 395mm shares.

since it's been on the books since 1980 seems unlikely there would be any huge goodwill component to book value...presumably they've had/found some reasons to mark up book value of the resort between 1980 and now.

will be really interesting to find out what the carrying value was and what % of that this write-down represents...

...any opinons on what a place like that is/was worth?

(I've never been there)

[ChipOat]

If The Greenbrier is in trouble with the backing of CSX, The Homestead has really got to be on the precipice as it's privately owned with no deep pockets behind it.  In the 1970's, the place got more than a little run down and, even now, one of the wings in the big, old main building has been closed for some time.

[cary lichtenstein]

Both are great resort destinations and both could wind up closing due to this economy.

I would think that any resort that is highly leveraged will be in trouble, ditto with highly leveraged golf communities. I know of a couple that have sold less than 5 houses in 3 years.

[Greg Tallman]

Homestead is in better shape than The Greenbrier. Neither will close.

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