Seattle's 5-star hotel losing Four Seasons connection
Seattle Times business reporters
The Four Seasons Olympic Hotel has been sold to a Toronto-based luxury hotel company for about $100 million, ending a long relationship between the Four Seasons and Seattle's grand-dame hotel.
The new owner, Legacy Hotels, will turn over management of the property to Fairmont Hotels & Resorts under a 40-year agreement, and the hotel will be renamed the Fairmont Olympic Hotel. The deal is expected to close this month.
The news was an emotional loss for a group of Seattle-area business leaders, including former Mayor Paul Schell and Columbia Hospitality Chief Executive John Oppenheimer, that wanted to buy the hotel. The group would have kept Four Seasons management, but its bid fell about $1 million short, Schell said.
Schell said he loves the hotel, and for many in the city, "it's part of our roots here."
"This is a hotel that is a very important property to Seattle, and it should be owned by people in Seattle," Schell said. "I'm disappointed. We're disappointed.
"I hope (Fairmont) treats this property with the care that the people in this city expect them to keep it."
Oppenheimer said Fairmont is a high-quality operator of four-star hotels but doesn't have the same posh amenities and service as the five-star Four Seasons.
"We think the Four Seasons is a great institution in Seattle, and it would be great to have a five-star hotel continue in Seattle," Oppenheimer said. "There are wonderful memories and legacies there, and it's a shame to see it go away."
The place has deep sentimental value for many who identify with the hotel as a place to get married, form business relationships and experience "magic" moments.
Jerry Patava, executive vice president and chief financial officer of Legacy, said the Four Seasons Olympic fit well into the chain's plans and its current hotels. He said the company does not plan to make major changes to the hotel.
"We'll look at some things," he said, "but we understand the hotel is in good shape."
Fairmont spokeswoman Emma Thompson said the company intends to boost the property's business in luxury conventions and business meetings and draw more luxury recreational customers. She also said Fairmont intends to keep as many of the hotel's good employees and managers as it can.
She called the property a valuable "heritage asset" in Seattle, one of the country's top 25 markets, where Fairmont has not before had a presence.
"We're thrilled to get the opportunity to get a hotel the Four Seasons has managed because of the incredible work they do," Thompson said. "We look forward to maintaining the standards that guests at this hotel expect."
Fairmont is no stranger to the region. It manages the Fairmont Empress Hotel in Victoria, B.C., and the Fairmont in San Francisco.
Fairmont also touts a commitment to luxury. It recently completed an $85 million renovation in San Francisco, where available rooms now start at $189 a night. Its penthouse costs $8,000 a night.
At the Four Seasons in Seattle, current rates start at $215 a night. The Presidential Suite costs $3,000.
The hotel's change of ownership comes after a complicated dispute between the owners of the Olympic. The University of Washington, whose original campus was on the site where the hotel is today, owns the land and the 12-story hotel building. In the mid-1990s, the UW sold a 64 percent stake to JMB Realty, a Chicago-based real-estate investment firm.
Four Seasons also got a 60-year management contract, with about 40 years left on it.
Legacy apparently made an offer earlier this year, but it depended on the hotel not having Four Seasons management.
In a brief statement yesterday, the Four Seasons said it had settled its dispute with the hotel owners after arbitration.
Under the settlement, it ends its management of the hotel once the sale closes. It will receive part of the proceeds and annual payments in the next few years, the company said.
Four Seasons apparently will be looking at opportunities to manage a new property in Seattle, the statement says. Company officials declined to comment further.
Four Seasons, also based in Toronto, has been involved with the Olympic since its extensive remodeling in the early 1980s and helped preserve the hotel as a historic landmark. The Seattle hotel was part of the company's expansion into the U.S. market.
The investment comes as downtown hotels struggle with low occupancy and falling room rates. In its April report, Wolfgang Rood Hospitality Consulting, which studies the Northwest hotel market, said downtown occupancies were 66.7 percent, down 2.1 percent from the same month a year ago. Average room rates were down 7.2 percent compared with the same month in 2002.
Patava, the Legacy CFO, said the company took into account the state of the market today and projects a good return. The price of the property would have been much higher had the hotel market been better.
Despite the economic downturn, Schell said, the Four Seasons remained profitable, and the local investors thought they would be making a good business decision while preserving a local institution. But he said there will be no legal wrangling or appeals. Legacy's bid won.
"It's a done deal," Oppenheimer said.
Stephen H. Dunphy: 206-464-2365 or email@example.com
Luke Timmerman: 206-515-5644 or firstname.lastname@example.org
Information from Seattle Times business reporter J. Martin McOmber in included in this report.
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