LITTLE ROCK — Working out lease terms for the Peabody Little Rock hotel to operate under a different brand is taking longer than anticipated.
Fairwood Capital LLC of Memphis underestimated the complexity of the terms of the lease for the hotel, which is owned by the city, according to Gretchen Hall, chief executive officer of the Little Rock Convention and Visitors Bureau.
On Tuesday, Hall said that the city Advertising and Promotion Commission should have a “terms sheet” on the deal by the end of November. Those lease terms must be reviewed by the commission before being considered by the Board of Directors.
After announcing the plan on June 28, Fairwood Capital anticipated that its due diligence phase would take a month to 60 days. However, the majority of the past four months has been in negotiating with a “major brand,” she said.
Fairwood, a private equity firm, has talked with Marriott, Hyatt and Hilton.
Hall said it is her understanding that the brand has been selected.
“We’re still working with the city on the lease and evaluating different operators. ... We’ve had talks with a variety of operators.” Ed Ansboro, a principal with Fairwood Capital, said on Tuesday.
Ansboro said he expects that Fairwood would have more to say about the project sometime in the next 30 days.
“We’re still very focused and excited about the opportunity,” Ansboro said.
Mayor Mark Stodola did not respond to several phone calls Tuesday.
Hall said that the hotel and the Statehouse Convention Center are owned by the city, with the Convention and Visitors Bureau operating the center.
Part of the complexity involves reaching an agreement with a hotel company that would normally own and operate its own property, she said.
The hotel and convention center buildings are conjoined. As a result, the hotel and convention center have shared expenditures and operating agreements. For example, the water plant for the hotel is located in the convention center.
Hall said that none of the brands that Fairwood has been talking with has a 4-star Forbes Travel Guide rating. The Peabody achieved that distinction in 2011, making it the only hotel in the state.
Forbes has said that it would re-evaluate the hotel after the deal is finalized.
The new operator would have advantages over the Peabody, whose original hotel with that name is in Memphis. The other is in Orlando.
The Peabody name has high regional recognition, but a widely known brand will offer access to a national sales reservation system, for example, “which we’ve never had before with that property.”
“The Peabody has been a great regional brand name but it doesn’t have the recognition of any of those three brands.”
Peabody invested $40 million in the former Excelsior Hotel and reopened it in 2002.
Business, Pages 27 on 11/14/2012