Employees face layoffs with change of management at Squaw Creek
Eight months after an ownership change at the Resort at Squaw Creek, North Tahoe’s largest hotel is undergoing another transformation – a new management company. Destination Hotels & Resorts is negotiating with resort owner Squaw Creek Associates to replace Benchmark Hospitality, as well as acquire a small percentage of ownership. As part of the process, all resort employees are being fired, although Destination intends on re-hiring some of the staff.Talks between Squaw Creek Associates, which has owned the resort since before it opened in 1991, and Destination started in November. Although the deal has not yet been finalized, both Benchmark and Destination sent out letters on Feb. 2 to all 609 Resort at Squaw Creek employees informing them of the change in management effective April 5. The letters also told staff their employment with the Resort would end on that date, while encouraging them to apply for a position with the new management team. Destination is unclear at this point how many employees it will re-hire.”As a company, it’s always our goal to re-employ as many qualified people as possible,” said Destination President Charlie Peck from the company’s headquarters in Denver, Colo. “We will decide prior to assuming responsibility in April.”The Benchmark letter was required by law as part of the 1998 WARN Act (Worker Adjustment and Retraining Notification Act), which obligates businesses with more than 100 employees to provide 60-day notice of a mass layoff or the sale of part or all of a business.Resort General Manager Jan McCormick resigned last week, after three years on the job since he is being replaced by a Destination appointee. He will be moving to Southern California for a job with Gemstone Resorts.However, most non-management employees are not worried about their jobs.”There’s not anybody else lined up to take our jobs,” said one worker who requested anonymity, adding that he will re-apply for his position.As part of the negotiations, Destination will also purchase ownership in the Resort. While Peck would not specify the amount, Asset Manager Richard Leider said it was only a limited interest and Squaw Creek Associates will remain the principal owner. Leider said the reason Squaw Creek Associates wanted to change management was because a company which both manages and owns a hotel has more incentive to see the business succeed.”They were happy with Benchmark, but this is a management company with equity, so it will align interests,” he said.The Texas-based Benchmark had managed the 403-room Resort since the start of operations.Destination, a privately held subsidiary of real estate company Lowe Enterprises, is the country’s second largest management company with more than 7,826 employees, almost 6,000 guest rooms, and more than $1.3 billion in assets under management.Destination currently manages 26 properties throughout the United States, including the Algonquin Hotel in New York, Vail Cascade Resort & Spa, Royal Palms Resort and Spa in Phoenix and the Inverness Hotel and Conference Center in Denver.”Squaw Creek is a wonderful property and we’re very excited to be joining the Tahoe-Squaw Valley community with a world class resort,” said Peck. “That’s what we are all about – world class properties.”Since 2001, the Resort has suffered from the downturn in the economy. One of the partners in Squaw Creek Associates, Hong Kong-based Kader Holdings Company Limited, reported a loss of $5 million in the 2002 fiscal year, which it attributed in part to the poor financial performance of the Resort, its major U.S. investment holding. As a result, the Resort had to lower room rates, which decreased its operating margin.Kader was also embroiled in a costly lawsuit regarding termination of the hotel’s management agency, although its 2002 annual report did not specify with whom. Kader reported it spent $1.4 million in legal fees “defending and protecting the Group’s interest.” The lawsuit has since been settled.Fairmont Hotels was rumored to have been interested in buying Squaw Creek last year, although a Resort spokeswoman could “neither confirm nor deny anything with Fairmont.”There is some speculation that the Resort’s hard times could account for the change in management, as well as why Kader bought out its partner, HCV Pacific Partners, last June. This led to the resignation of HCV and Resort-head Randy and Scott Verrue.”I think the economy has been hard on the place since 9-11,” said the anonymous employee. “They have been trying to dig themselves out of a hole since then.”
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