Blackstone Group LP is being sued over its 2007 sale of Extended Stay, which left the hotel company insolvent and drove it into bankruptcy, according to a report in Bloomberg Businessweek.
The report, which cites a lawsuit filed 14 June in U.S. Bankruptcy Court in Manhattan and New York State Supreme Court, claims that Blackstone “siphoned” US$2.1 billion from the company as part of the leveraged buyout without regard for how it would perform following the deal.
“The real cause of the company’s bankruptcy was an economic tsunami which resulted in across-the-board revenue per available room declines of more than 20(%),” Christine Anderson, a Blackstone spokeswoman, said in an e-mailed statement. “This was an industrywide phenomenon that landed every large lodging transaction executed in 2006-2007 in bankruptcy, foreclosure or restructuring.”
Blackstone, based in New York, sold Extended Stay to David Lichtenstein’s Lightstone Group LLC for US$8 billion, according to a Lightstone statement at the time. Lichtenstein and Lightstone are also named as defendants in the lawsuits. Extended Stay filed for bankruptcy in 2009.
Why exactly did Jim Abrahamson leave IHG for Interstate? That’s a question HotelNewsNow.com’s Jason Q. Freed sets out to answer this morning with “Timing key in move, Abrahamson says.”
After chatting with Abrahamson, Freed found the motives to be quite clear: The bow was being wrapped on the three-year Holiday Inn relaunch project, and IHG was beginning to focus overseas. Simultaneously, Interstate, which was growing by leaps and bounds, had been looking for someone to replace CEO Tom Hewitt.
Abrahamson knew IHG’s Americas leadership would be in good hands, Freed reports, and the opportunity to be top dog at a company with such critical mass that Interstate enjoys was too good to pass up.
STR Global churned out more monthly pipelines today:
Asia/Pacific: The Asia/Pacific hotel development pipeline comprises 1,227 hotels totaling 302,858 rooms.
Year to date through 30 April 2011, 98 projects opened in the region with 15,007 rooms. There are 324 more projects expected to open in the remainder of 2011 with 73,430 rooms. In 2012, 424 projects are planned to open with 112,060 rooms.
Europe: The Europe hotel development pipeline comprises 802 hotels totaling 131,536 rooms.
Among the chain-scale segments, the upscale segment accounted for the largest portion of rooms in the total active pipeline at 21.7% of the pipeline with 28,504 rooms. Two other segments each made up more than 15% of rooms in the total active pipeline: the unaffiliated segment (19.3% with 25,376 rooms) and the upper midscale segment (19% with 25,045 rooms).
Middle East/Africa: The Middle East/Africa hotel development pipeline comprises 474 hotels totaling 128,344 rooms.
Among the countries in the region, Qatar shows the largest expected room growth (+84.4%) if all 7,002 rooms in the total active pipeline open. Other countries with large expected room growth include: Oman (+67.7% growth with 4,211 rooms in the total active pipeline); United Arab Emirates (+59.5% with 50,908 rooms); Bahrain (+55.3% with 3,557 rooms); and Algeria (+51.6% with 1,744 rooms).
Speaking of pipelines and development … Barry Sternlicht is developing three hotels in New York City, reports Crain’s New York Business.
Sternlicht is converting an office building at 1414 Sixth Avenue, a property at the New York Public Library site with Tribeca Associates, and a third hotel at an undisclosed location.
“It marks a return for Mr. Sternlicht,” hotel consultant Sean Hennessey said. “He has the wherewithal to be a force in New York, both financially and creatively.”
During their annual conference Thursday, AAHOA board members gave some more insight into the much-anticipated launch of its own online reservation system.
The website, called mybesthotelrate.com (www.mybesthotelrate.com), will launch this fall and is powered by InnLink. Commission per transaction will be significantly lower than the 25-30% charged by traditional online travel agencies, the association said. AAHOA expects to charge only 8-10%. Perhaps most importantly, mybesthotelrate.com allows members to maintain last-room availability.
To learn more, visit mybesthotelrate.com and read conference coverage from HotelNewsNow.com Patrick Mayock: “Teamwork the name of the game for AAHOA.”
Compiled by Patrick Mayock.