Reeling Greenbrier Exploring Options

If the entire lodging industry is facing a deep recession, and the luxury segment is getting hit the hardest, it's no surprise that "America's Resort," The Greenbrier, is struggling the most. The resort that defines itself as "THE preeminent resort in the ultra-luxury market," according to its website, lost $35 million last year, and owner CSX Corporation has hired Goldman, Sachs & Co. as its financial advisor to explore all strategic options.

"The Greenbrier is at a crossroads," said Michael J. Ward, president, chairman and CEO of CSX, a rail-based transportation company. "While we have continued to make investments to keep the resort competitive, the market for luxury hospitality services is shrinking rapidly in this economy. The Greenbrier lost $35 million last year, and the resort faces even more difficult challenges in 2009. It is imperative that we respond to this situation without delay. Our goal is to make The Greenbrier not only one of America's great destinations, but also a viable business entity."

In a Wall Street Journal story last week, a CSX spokesman emphasized the company isn't necessarily planning on selling the resort. The West Virginia resort is also looking into adding gaming operations--an option now that local residents passed a measure in November allowing casino gambling--and is working with The Innovation Group, a firm specializing in gaming analysis and marketing.

The Greenbrier completed a $50-million renovation in the spring of 2007 to update and modernize the classic Dorothy Draper-designed resort. New signature restaurant Hemisphere and trendy lounge 3880 opened in July, not long before the economy started to slow. They were opened as seasonal venues, Greenbrier Director of Public Relations Lynn Swann said, and closed after the winter holidays in 2007. Hemisphere's chef left last spring for another job and combined with lower business levels, the restaurant never reopened, Swann added. The lounge opened at times through the year based on business.

To make matters worse, The Greenbrier and the Greenbrier Council of Labor Unions have been involved in a bitter labor dispute. Hotel employees have been working without a contract for almost a year. The resort lost several conference and meeting events--significant revenue any year, let alone a down one--to other resorts because of fear of a strike.

CSX also announced Michael Gordon was promoted to president and managing director of The Greenbrier after serving as GM since 2007. Previous president, Andrew Fogarty, will continue to serve on the board of directors of The Greenbrier Sporting Club Development Company.

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