Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, July 2, 1993 TAG: 9307020185
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Medium
ClubResorts Inc. and Virginia Hot Springs Inc., which owns the Homestead, have signed a letter of intent that would create a joint company to own and operate the 200-year-old hotel.
ClubResorts is a subsidiary of Club Corporation International, which is the nation's largest privately held golf and conference resort owner and operator. Among its holdings is Pinehurst Resort and Country Club in Pinehurst, N.C.
The agreement says that ClubResorts would begin as a minority owner of The Homestead, but eventually would buy Virginia Hot Springs' interest in the 600-room hotel and 3,000 acres surrounding it. Another 12,000 acres of adjoining land is not part of negotiations with ClubResorts, said Homestead officials.
However, if the resort's 1,200 or so employees vote for a union in an election scheduled July 30, the deal could dissolve. The Homestead is Bath County's largest employer.
Last June, the Hotel and Restaurant Employees Union was defeated in its fourth attempt to organize The Homestead workers. The union lost by a vote of 262-178. Union officials said workers voted against the union because they were afraid of losing their jobs and of threats that the hotel might close if the union won.
The nonunion requirement is not the only contingency in the new agreement, said Dan Ingalls, whose family owns controlling interest in The Homestead. NationsBank also must agree to let ClubResorts assume The Homestead's debts.
Ingalls, who is president of Virginia Hot Springs, said the hotel is not behind in payments to NationsBank, but it is not making a profit either even though business was better last year than the year before.
The Homestead's 600-room hotel is averaging about 45 percent occupancy, he said. The Homestead complex includes a health spa, golf courses, ski slopes, trails and other sporting facilities.
ClubResorts is credited with reviving the Pinehurst Resort, which it bought in 1984. It re-established Pinehurst as a premier golf resort, which was host to the 1991 and 1992 PGA Tour Championships and also will get the 1994 U.S. Senior Open.
The Homestead has three championship golf courses, including The Cascades Course, which was rated by Golf Magazine as one of the top 100 courses in the world.
James Hinckley, president of ClubResorts, said The Homestead and Pinehurst are "in the same grand tradition." He said ClubResorts is convinced "we can further its prominence as one of America's great resorts."
ClubResorts' sister company, Club Corporation of America, is the world's largest owner and operator of private city, country and athletic clubs, including The Jefferson Club in Roanoke.
In addition to Pinehurst, ClubResorts owns or operates Ocean Reef Club in Key Largo, Fla.; Barton Creek in Austin, Texas; Shanty Creek-Schuss Mountain Resort in Traverse City, Mich.; Quail Hollow, near Cleveland, Ohio; and Shangri-La Resort in Grove, Okla.
Ingalls said he expects Virginia Hot Springs shareholders to vote on the proposed joint venture in August.
The Homestead owners hired a Baltimore investment banking firm in December to help it find capital so it could upgrade its meeting facilities and become more competitive. Its nearby competitor, CSX Corp.-owned Greenbrier, a Mobil Five-Star resort 40 miles away in West Virginia, invested $25 million in capital improvements from 1987 to 1992.
While it searched for investors, The Homestead reduced rates and began marketing itself as a sports complex rather than just a luxury retreat.
by CNB