CHARLESTON, W.Va. – The historic Greenbrier resort, which has gone from hosting presidents and royalty to posting losses, filed for Chapter 11 bankruptcy protection Thursday and unveiled a plan to sell itself to hotel giant Marriott International Inc. for up to $130 million.
A sharp recessionary downturn for luxury hotels helped drive The Greenbrier to a deal that would end nearly a century of ownership by railroad company CSX Corp. and its predecessors of the resort, which blossomed from an 18th century sulfur spring retreat to a society hotspot in the roaring 1920s.
Under the sales plan revealed in the bankruptcy filing, Marriott would receive $50 million over two years from Jacksonville, Fla.-based CSX Corp. to operate the resort. Marriott in turn would pay CSX between $60 million and $130 million within seven years, depending on timing and the hotel's financial performance. The deal is expected to close later this year, pending new labor agreements and approval from a bankruptcy court, which is expected to allow other potential buyers to make bids.
Bethesda, Md.-based Marriott would be getting a fabled resort on the National Register of Historic Places whose guests have included Dwight Eisenhower and 25 other U.S. presidents, Monaco's Prince Rainier and Princess Grace and the Duke and Duchess of Windsor.
The 6,500-acre resort in southeastern West Virginia with 721 rooms also is the site of a once-secret Cold War bunker built to house Congress in case of a nuclear attack.
"The Greenbrier is an historic national treasure and we are excited by the opportunity," Marriott spokesman Thomas Marder said. "There are a number of conditions to work through which we hope will be completed successfully."
Marder said Marriott plans to retain the Greenbrier name.
Voters narrowly approved a measure in November allowing casino-style gambling at the resort. Asked about Marriott's plans for gambling, Marder did not answer directly. "Our interest in the Greenbrier is unrelated to the changes in the county's gaming laws," he said.
CSX would be ridding itself of a money losing property blamed for a 32 percent drop in CSX's fourth-quarter earnings.
Luxury properties have been hard hit as demand for hotel rooms overall has fallen sharply since last fall. The downward trend has accelerated this year after several companies that received emergency federal funds came under public criticism for hosting retreats at fancy resorts.
The Greenbrier has lost more than $90 million in the past five years, including $35 million in 2008, and the bankruptcy filing shows the flow of red ink is speeding up.
Monthly revenue fell to just over $1 million in February from more than $2.7 million in January, according to the filing. The resort's pretax loss at $3.74 million in January and $4.96 million last month.
The filing estimates the resort's assets are worth between $50 million and $100 million. It owes between $100 million and $500 million to more than 5,000 creditors, including $91 million to CSX. The resort is seeking court approval to borrow up to $19 million from CSX.
"The potential outcome of this transaction would help preserve an important and historic property in West Virginia," CSX spokesman Garrick Francis said.