Too much money in the hands of the wealthy lead them into the light of reality, the hard way.
ANGUILLA, British West Indies — Robert Sillerman amassed a billion-dollar fortune buying and selling media and entertainment companies. Among his most successful deals: the purchase of television franchise “American Idol.”
Mr. Sillerman’s winning streak ended on an alluring stretch of beach on this tiny Caribbean island.
His luxury hotel, condominium and golf resort here, Temenos, languishes half-built and out of money. “American Idol” creator Simon Fuller and novelist Dan Brown, among others, have put down deposits on million-dollar villas. It’s not clear when or if their vacation homes will be completed.[...]
[...]Some newly opened properties aren’t generating enough cash to cover operating expenses. Construction of others is being halted as lenders and investors pull out. During the first nine months of the year, developers postponed or canceled 43 luxury hotels totaling about 9,300 rooms in the U.S. and the Caribbean, according to research firm Lodging Econometrics.
While veteran hoteliers are accustomed to booms and busts, the newcomers are getting a sobering lesson in the risks of owning and developing high-end lodging, which has been hit hard by the real-estate bust.[...]
[...]An investment group headed by Dell Inc. founder Michael Dell teamed with Rockpoint Capital LLC to acquire the Four Seasons Hualalai in Hawaii in 2006. Since then, the 243-room hotel’s annual cash flow has fallen to $7.9 million, from $20.6 million, and its occupancy rate declined by 33 percentage points to 54%, loan documents indicate.[...]
[...]Ty Warner, the Beanie Baby mogul, might lose his slumping Four Seasons New York and three other luxury hotels to foreclosure unless he can land a one-year extension on the properties’ $345 million securitized mortgage, which comes due Jan. 9, according to credit-rating company Realpoint LLC.[...]
[...]Microsoft Corp. founder Bill Gates has run into several problems on the hotel front. In 2007, his personal investment company teamed with Saudi Prince Alwaleed bin Talal to acquire Four Seasons Hotels & Resorts, which manages 82 luxury properties, for $3.4 billion. Since then, revenue per available room at those properties is down 25%. In addition, his investment company is foreclosing on the 582-room Terranea Resort in Palos Verdes, Calif., which defaulted on a $110 million loan from Mr. Gates’s firm shortly after opening in June.[...]
[...]EBay Inc. founder Pierre Omidyar is a major investor in Montage Hotels & Resorts, which owns two luxury hotels in California and one about to open in Utah. At its new Beverly Hills boutique hotel, occupancy is running about 60%, and only four of its 20 residences have sold so far.[...] (Source: WSJ) H/T Butch
Oh how sad … NOT
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