Gaylord Sells Hotels Brand Rights, Management of Four Properties to Marriott International for $210 Million
Following a strategic review, Gaylord Entertainment has decided to sell the Gaylord Hotels brand and the rights to manage its four convention center/hotels properties to Marriott International for $210 million.
Once the sale is finalized, Gaylord will continue to own its hotel properties and other businesses and will reorganize and elect to be treated as a real estate investment trust (REIT) effective Jan. 1.
By transferring day-to-day control of the hotels to Marriott, Gaylord expects to save $33 million to $40 million a year.
The four properties include the Gaylord Opryland Resort and Convention Center in Nashville, Tenn.; Gaylord Texan Resort and Convention Center in Grapevine, Texas; Gaylord Palms Resort and Convention Center in Kissimmee, Fla.; and Gaylord National Resort and Convention Center in Prince George’s County, Md.
“We are pleased to be announcing today a transaction that we believe allows shareholders the potential to realize maximum long-term value for their shares in Gaylord Entertainment,” said Colin V. Reed, Gaylord’s chairman and CEO.
He added, “Our months-long review of various options led us to the conclusion that the REIT structure represents the best pathway to realize the long-term value of our business and to position the Gaylord brand for continued growth.”
The strategic review found that the sale of the brand and management rights would have several long-term benefits for the shareholders and the company, according to Gaylord officials.
The company would have the cash received in connection with the sale of the brand and management rights, there would be the opportunity to realize substantial cost savings and revenue enhancements because of Marriott’s scale and reach in the hospitality market and Gaylord would be a well-capitalized REIT focused on group-oriented destination hotels in urban and resort markets.
Once the deal is finalized, the four Gaylord properties will join the Marriott portfolio of brands.
Marriott will receive a management contract with an initial 35 year term, 2 percent base management fee and an incentive fee linked to improvement in hotel profitability.
“We have long admired Gaylord, both for the hotels they have created and for their superb job in hosting major meetings and events,” said Arne Sorenson, Marriott International president and CEO.
He added, “Working with the Gaylord brand, the existing four hotels and a Gaylord team that provides outstanding customer service, we are convinced there is tremendous upside potential for growing hotel revenues and profits and developing careers."
Gaylord will continue to own and operate the Grand Ole Opry, Ryman Auditorium and other attractions as taxable REIT subsidiaries.
The deal will impact the Aurora, Colo., hotel and convention center project, according to Gaylord officials.
“The company will no longer view large-scale development as a means for growth and will not proceed with the Colorado project in the form previously anticipated. The company will reexamine how the project could be completed with minimal financial commitment by Gaylord during the development phase,” Gaylord company officials said.