WASHINGTON, D.C.— Only five months after their terminated merger agreement, MeriStar Hotels & Resorts and American Skiing Company have signed a five-year consulting contract which gives Meristar management control of eight American Skiing destination resorts. The deal, totaling 3,423 rooms, nearly doubles the size of MeriStar’s resort management portfolio, which now includes 20 properties in resort destinations. “This raises the level of awareness of the size of our resort business. People often don’t recognize us for our resort properties; they only recognize us for our commercial hotels,” said John Emery, Chief Investment Officer/MeriStar. MeriStar’s portfolio currently consists of 270 hotels and 20 resorts, with approximately 55,000 guestrooms. Emery noted, however, that the resort properties “tend to be larger, so our resort business actually consists of about 15% of our total business.” The eight new destination properties comprise hotels, inns, and condominiums ranging from 40 to 300 rooms, and span from California to Vermont. MeriStar has been working with American Skiing to acquire the management contracts since the intended merger of the two companies was terminated earlier this year. “It’s unfortunate that the merger didn’t materialize, because the economy shifted. But this is not of sign that we’re reviving any merger talks,” said Emery. He did note that the new deal is “a great indicator of how both companies looked at the merger deal. At first it made sense, then it didn’t because of the economy, but we still found a way to improve each other’s businesses without going through with the merger.” As previously reported by HOTEL BUSINESS®, the two companies signed a definitive agreement to merge in February after receiving approval from both companys boards of directors, however, the deal was later called off in March due to changes in economic conditions and the combined companies reported inability to effect the capital market transactions required to consummate the merger. The new deal shows that the two companies still contain significant synergies and are willing to work together, according to Emergy. “We have two main sets of synergies,” he said. On the cost side, the two companies would have greater purchasing power, and a system that would lower the cost of products “from F&B to insurance,” said Emery. Also, from the sales and marketing perspective, MeriStar and American Skiing could create a better system using the types of clients that are already using their systems. In addition, MeriStar expects to bring the eight mountain resorts incremental meetings business, similar to what the company has done for its warm weather resorts. “We can drive business to the mountain resorts in the summers, and not just leisure business but meetings business. It’s natural fit to what we’re already doing at our warm weather resorts,” said Emery. He added that MeriStar’s South Seas Resort in Captiva Island, FL has a year-round average occupancy rate of approximately 80%. The eight American Skiing resorts to be managed by MerStar include: the Grand Summit Hotel at Sugarloaf, ME; the Grand Summit Hotel and Conference Center and Jordan Grand Resort Hotel and Conference Center at Sunday River, also in Maine; the Grand Summit at Attitash/Bear Peak, NH; The Sugarbush Inn, VT; the Killington Grand Resort Hotel and Conference Center, VT; the Grand Summit Resort Hotel and Conference Center at Mount Snow, VT; Steamboat Grand Resort Hotel and Conference Center, CO; and the Grand Summit Resort Hotel and Conference Center at The Canyons in Utah.
John Emery