Marriott proposal entices agency
Marriott Vacation Club International is vying for a chance to purchase development rights to the Lake Tahoe Inn, the property adjacent to Heavenly Ski Resort’s 138-car gondola in the heart of the Park Avenue Redevelopment Project.
But Marriott faces two obstacles: The South Tahoe Redevelopment Agency and American Skiing Company Resort Properties.
ASC is in negotiations with Marriott to transfer development rights, but unless the Redevelopment Agency accepts Marriott’s proposal to change the project from a quarter-share hotel to a conventional time-share hotel, no deal can be made with ASC, which has two other interested parties in the property, said Stan Hansen, senior vice president of ASC.
The hotel project was originally approved Oct. 28, 1999, in a Development and Disposition Agreement between American Skiing Company Resort Properties and the South Tahoe Redevelopment Agency .
When the hotel project was originally approved, specific design requirements were established. Marriott’s project would change it to a 325-unit quarter-share hotel to a 240-unit conventional time-share, comprised of one- and two-bedroom apartments. There are certain architectural adjustments that inherently will need to be made, said Lew Feldman, attorney for ASC and the Marriott.
But architectural changes to the project were not a primary concern for Redevelopment Agency members, who were more concerned with the differing financial impact.
“I want to know, do the numbers crunch?” said agency member Tom Davis.
Marriott Vice President David Holton told the Redevelopment Agency Sept. 12 that Lake Tahoe has been a target market of the Marriott for eight years.
According to figures presented, the owner of a time share spends $2,000 per stay, a figure he compared to hotel guests who spend $715.
Agency member Brooke Laine wanted to know how many time-share hotels are in Lake Tahoe, and what is the saturation point?
The presenters, which included Kenneth Kuchman, vice president of Pannell, Kerr, Forster International, a consulting group representing Marriott were unable to answer her questions. But Holton insisted that there was a market for a time-share hotel in South Lake Tahoe.
“We don’t think there is any chance of saturation,” he said.
The Redevelopment Agency members had other concerns.
“My issue with the time-share is with the phasing,” said agency member Hal Cole.
The proposed project is to be built in multiple phases, but the Redevelopment Agency wants to have some guarantee that it will be able to pay off the bonds by the completion of the first phase and not the last, Davis said.
“We have to look at the impact on debt and how it effects us in the long run,” he said.
According to Marriott’s plan, construction would begin in May 2001. Although 74 units and resort amenities would be open by 2002, the fourth and final phase would not be completed until 2005.
“We are concerned that the project might not get finished because of our previous experience with Embassy Suites,” Laine said.
Other concerns included the difference in tax revenue between transient occupancy tax versus a tax increment.
Laine expressed pleasure that Marriott was interested in conducting business in Lake Tahoe, but said she wanted to see some hard numbers before she could realistically consider the project.
“I want to see the financial plan. And what are those projections for the (transient occupancy tax)?”
Marriott hopes to come back to the Redevelopment Agency with a financial plan on Oct. 3 and to make necessary changes to the DDA on Oct. 10.
Robert Stern can be reached at firstname.lastname@example.org or (530) 541-3880, ext. 204
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