No Hawaii cuts planned
in sale of Aston parentGaylord has agreed to buy
ResortQuest for $109 million in stock
Gaylord Entertainment Co., owner of the Grand Ole Opry musical show, said yesterday it agreed to buy ResortQuest International Inc., the largest U.S. manager of vacation rental properties, for about $109 million in stock.
ResortQuest, through its Aston Hotels & Resorts Hawaii and Maui Condominium and Home subsidiaries, manages 33 Hawaii properties, including hotels and resort condominiums, in Waikiki, Maui, Kauai and the Big Island.
Jim Olin, chief executive officer of ResortQuest, said the merger will not result in any Hawaii layoffs "and, if anything, we hope to grow the company.
"We have no plans to close any Hawaii properties," Olin said. "Our main goal is to continue to grow the brand, enhance our customer service and increase occupancy. Gaylord can help us with all of these. It's a win-win for all concerned."
Gaylord will pay 0.275 of a share for each ResortQuest share, valuing the stock at $5.53. That's an 6.3 percent premium over ResortQuest's closing price Tuesday of $5.20. Gaylord said it also plans to assume about $71 million in debt from ResortQuest, which holds $3 million in unrestricted cash. The transaction has a total value of about $177 million.
"This acquisition will transform Gaylord Entertainment into a multiproduct hospitality company that can offer a range of accommodations to convention, business and leisure travelers," said Colin Reed, president and CEO of Gaylord.
Acquiring ResortQuest allows Nashville-based Gaylord to add about 20,000 vacation rental units, including 5,464 in Hawaii, to its chain of hotels that focus on offering meeting places for business customers. ResortQuest, based in Memphis, has a 4 percent market share in the $10 billion vacation rental-homes and condominiums business in the United States, Gaylord said.
Olin said cross-selling should be strong between the types of customers that use the two companies' services.
"I anticipate this will be extremely positive for Aston locally, not only for employees but for owners and guests," said Kelvin Bloom, president of Aston Hotels & Resorts Hawaii and a regional vice president for ResortQuest. "This will broaden our market reach."
Some of Aston's more notable Hawaii properties include the 700-room Aston Waikiki Beach Hotel, which was just renovated for $30 million; the Aston Waikiki Beach Tower, a resort condominium property that has one of the highest average rates in the state approaching $400 a night; the Aston Kaanapali Shores on Maui; the Whaler on Kaanapali Beach, recently recognized as one of the top 500 resorts and hotels in the world -- and one of 28 singled out in Hawaii -- by Travel + Leisure Magazine; and Kauai's Waimea Plantation Cottages, which recently won the Hawaii Visitors and Convention Bureau's Keep it Hawaii top award for accommodations, the Kahili Award.
In Waikiki, Aston manages about a dozen hotels and resort condos, including 2,000 of its statewide 5,000 units. The remaining units statewide are managed by Maui Condominium and Home.
ResortQuest's properties have a combined real estate value of more than $7 billion, Gaylord said. The companies expect the transaction to close early next year.
"We believe that there are significant revenue opportunities with Gaylord, given its consumer reach," Olin said. "Our 1.6 million guest database will be combined with Gaylord's 8-plus million consumer reach, which should bode well for the rental income to our homeowners and provide us an additional significant competitive advantage in our resort markets."
ResortQuest net tumbles
Separately, ResortQuest said its second-quarter net income fell 42 percent from a year ago, despite revenue per available unit rising 3.8 percent.
Net income declined to $1.3 million, or 7 cents a share, from $2.2 million, or 12 cents a share, in last year's second quarter. Income for the latest period includes a relocation expense of $366,000.
Analysts surveyed by Thomson First Call had anticipated second-quarter earnings of about 8 cents a share.
Total revenue decreased to $39.4 million from $39.9 million.
Hawaii resorts, though, continued to rebound from the impact of SARS as their gross lodging revenue increased 3.4 percent to $34 million from $32.9 million a year ago. For the company, total gross lodging revenues gained 1.5 percent to $99.8 million from $98.3 million amid declines in gross lodging revenues in both ResortQuest's desert and mountain resorts. The declines were primarily due to lower occupancy levels in fly-to markets during April.
Shares of ResortQuest closed yesterday up 10 cents, or 2 percent, at $5.20 on the New York Stock Exchange. Gaylord stock ended at $19.34, down 77 cents, or 3.8 percent, on the NYSE.
Bloomberg News, Dow Jones News Service and the Associated Press contributed to this report.
