HONG KONG? In all likelihood, Century City Holdings Ltd. will not be forced to divest itself of Regal Hotels International as a means of staving off further erosion of its current financial situation. However, it?s at least as likely that the 19-property Asia and U.S. collection of hotels will shortly be answering to at least one other financial investor other than Century City and its subsidiary, Paliburg Holdings Ltd. Apparently, it has been considerably less than a closely held industry secret that Century City?and Paliburg?have been courting offers from potential investors in the global hotel chain for the better part of the past two years. However, prevailing opinion similarly maintains that when an investor finally does step forward with a suitably enticing offer, it will probably be a major hotel chain rather than a REIT shaking out as the successful suitor. As reported in HOTEL BUSINESS ? (July 21- Aug. 6, 1999, page 2), Century City chairman Lo Yuk-sui said the organization is facing the possibility of having to file for bankruptcy protection if it is not successful in restructuring its debt and/or recapitalizing its overall operations?real estate-related and otherwise. Of course, Century City?s constrained economic position is not necessarily unique. Several industry analysts and market-watchers agree, a number of lodging and hospitality operations are currently being caught with their asset values down as Asia works its way through the throes of a down cycle. As Regal?s U.S. operations? President Tom O?Leary avows: ?Hard times are?unfortunately?nothing new to Asian real estate companies. Similarly, nothing new should be read into Century City?s recent announcement of its debt of more than US$903 million owed to several banks. ?Basically,? he explains, ?this announcement was strictly in keeping with standard operating procedure in the Asian marketplace.? ?Among the more viable options open to Century City Holdings at this time,? the Englewood, CO-based hospitality chieftain maintains, ?are efforts aimed at attracting investment for specific properties as well as forming a joint-venture operation. The least attractive alternative would be the outright sell-off of Regal Hotels…particularly when one realizes Century City intends to remain an active participant in the international lodging arena.? In line with this stance, O?Leary points out that Regal?s 12 U.S.-based properties are currently operating ?soundly and solidly.? However, he also admits his task of growing the hotel company?s U.S. business has nonetheless ?felt the pinch? brought about by the organization-wide lack of financial resources.
