CHICAGO, IL— It appears the time is right for Laurence Geller to go public with his privately-held investment organization, Strategic Hotel Capital LLC (SHC). In fact, it may well be the timing of Geller’s move is actually better— and better thought-out— than many throughout the industry might otherwise suspect. Obviously, the recent return of investor interest in the lodging sector— and the resultant increase in hotel-company share prices of late— could easily prompt any number of private organizations to think seriously about capitalizing on the appetite of public investors. In addition, some have even gone so far as to surmise that any initial public offering (IPO) from the lodging sector would benefit by being brought out sooner rather than later. Along these lines, two schools of thought were most commonly voiced during the course of a pair of industry gatherings this year: the Americas Lodging Investment Summit in Los Angeles, and the Prism Hotels’ conference in Grapevine, TX examining hotel defaults and their servicing. First, the stock market is in a recovery mode, but there is no way to forecast when or if this situation could change, or even what might set off such a turnaround. Secondly, any sales transaction stands to benefit by transpiring during the coming spring months, when trailing 12-month results would compare current levels of operation and fiscal fortune to those still-heavily-depressed numbers posted early in 2003. As the industry showed significant signs of improvement in the latter half of the past year, trailing 12 month comparisons might understandably prove to be not quite so eye-catching or promising. Yet another hint that time may indeed be of the essence— and essentially, working in Geller’s favor— was brought up in the form of repeated references to the SHC CEO’s pending legal action against Marriott International on behalf of three of his Southern California hotels: the 137-room Renaissance Beverly Hills; the 393-room Ritz-Carlton Laguna Niguel; and the 444-room (Marriott) Rancho Las Palmas. Specifically, Geller is seeking legal court-ordered relief from Marriott stemming from a litany of charges, including: breach of contract; breach of implied covenant of good faith and fair dealing; breach of fiduciary duty; fraudulent concealment; unfair and deceptive business practices and unfair competition; and an accounting. In line with this legal action, Geller is seeking a decision in his favor that would cover all attorneys fees, all costs inherent to filing said suit, pre- as well as post-judgment interest at the maximum legal rate; and such other relief as deemed necessary and proper by the courts. The interesting aspect of this court case— which some maintain could result in a settlement tendered by Marriott, if the Washington, DC-based mega hotel-management company loses, in the $300 million to $500 million range— is that, if Geller succeeds in launching his IPO while the case is still unsettled, Marriott, through its involvement with that company, could be forced to open its books to public scrutiny. It has been contended this possibility is not a scenario Marriott would seem to relish, given that firm’s long-standing track record of playing its financial and operational cards close to the vest. Marriott would not comment on the case. Considering the favor hotels presently enjoy in the public markets, as well as the pressure an SHC IPO could exert on Marriott to reach settlement terms, it just might behoove Geller to move forward as quickly as possible with his move to the public market. As such, the next logical question becomes: How quickly can such an offering be lined up? Several sources said that SHC’s original game plan, which was drawn up some seven years ago, called for the company to test the public-market waters via an IPO in 2001. However, the downturn in the economy at that time, as well as the industry constriction that followed closely in its wake, effectively put an
