LITTLE ROCK — The five ducks that waddle in a twice-daily march through the Peabody Hotel’s lobby will continue their ritual promenade and swim for a few more weeks while final negotiations to sell the Statehouse Convention Center’s anchor hotel wrap up.
The hotel’s management announced Thursday that BG Excelsior Limited Partnership, an affiliate of the Peabody Hotel Group, signed an agreement with real-estate investment firm Fairwood Capital LLC of Memphis to sell the hotel. Fairwood Capital will then broker a deal to sell the remainder of the Peabody’s lease to a national or international hotel chain.
Gretchen Hall, chief executive officer of the Little Rock Convention and Visitors Bureau, said a national chain has not yet agreed to purchase the hotel, and an announcement of what brand name may grace the top of the red towers on Little Rock’s riverfront likely won’t come for another month.
Documents from investors obtained through Freedom of Information Act requests show Fairwood Capital has been courting the Marriott and Hyatt/Hilton hotel groups.
“The Peabody is a great regional brand, and they have been great community partners,” Hall said.
“A national brand will bring a lot of positives, including national name recognition, a national sales system, a national reservations system. That will be a major benefit for tourism and bringing people into Little Rock.”
Hall also said the Peabody Little Rock is the only one of the three Peabody hotels, including the Memphis flagship and a hotel in Orlando, Fla., that is being sold at this time.
The convention center, hotel building and land are owned by Little Rock, which controls a long-term lease for the building with the hotel group. The Little Rock Board of Directors and the Little Rock Advertising and Promotion Commission must review the negotiations and transfer of the lease before they can be finalized.
“This is our convention hotel, and we want a top-tier convention hotel in the city. We have sent that message, and we will continue to send it,” City Manager Bruce Moore said.
Monte Hansen, general manager of the Peabody Little Rock, said the hotel has fared like most hotels in the nation, seeing receipts drop after the economic downturn began in 2008.
“The hotel has had a rough couple of years through the recession, but it is not unusual for hotels to change ownership or change hands, especially in the real-estate market these days,” he said.
“In terms of revenue, this year has turned things around. The growth has been phenomenal.”
According to gross sales-tax receipts for taxable income reported to the Convention and Visitors Bureau, the hotel did $21.5 million in business in 2007. That number declined to about $19.6 million in 2008 and then $16.3 million in 2009.
There was a slight increase in 2010 at $16.8 million and another drop in 2011 to less than $16.1 million.
Those receipts don’t include income from sales that don’t fall under the city’s hospitality tax, including fees for alcohol, parking, gift-shop items and bookings at the hotel’s meeting rooms. Only prepared food and beverages and lodging sales are included.
For the first four months of 2012, the hotel reported more than $6.7 million in taxable sales. If those trends continue through the busier hotel seasons, the hotel could see its first major gain in revenue since 2008.
“Our numbers are on the upswing so far this year, and we are on track to see our best returns in five or six years,” Hansen said.
The Peabody Hotel Group borrowed about $28 million from the Arkansas Teacher Retirement System in 2000 for renovations, system President George Hopkins said. He said the company never missed a monthly payment.
When the sale is finalized, the system will receive the remaining $23.8 million in principal and interest on the loan, which was renewed in 2009.
Ed Ansbro, a principal with Fairwood Capital, did not return calls seeking comment.
Fairwood Capital likely has an operator in mind to run the Peabody, said Joe McInerney, chief executive officer of the American Hotel and Lodging Association.
“They wouldn’t be buying [the Peabody] if they didn’t know where they’re going with it,” McInerney said.
The Peabody took over a lease signed by the Excelsior hotel in 1980. That hotel had opened in 1982, after the Marion Hotel - which had occupied the space since 1909 - was demolished.
The Little Rock Peabody opened in February 2002 after a $40 million renovation.
The Peabody Hotel Group’s lease with the city ends Sept. 14, 2033, but includes the option to renew the lease for two successive 25-year terms.
The Peabody is the only hotel in Arkansas with a four-star rating, given last year by Forbes Travel Guide.
The hotel will retain its four-star rating after the sale,but Forbes Travel Guide will do another inspection within 90 to 120 days after a change in ownership, said Shane O’Flaherty, president of global inspections and ratings for the publication.
About 70 percent of Forbes Travel Guide’s ratings are based on service and 30 percent on the facility, O’Flaherty said.
The hotel brands that have received four- or five-star ratings include Four Seasons, Ritz-Carlton, Mandarin Oriental and several independent hotels, O’Flaherty said.
There are no Hilton or Marriott hotels with the two highest ratings, he said.
Larry Carpenter, who owns the Holiday Inn Presidential in downtown Little Rock and sits on the Advertising and Promotions Commission, said the city will want the new hotel to remain the “poster child” of Little Rock’s hotels.
“We’d want to look at the totality of the deal to make sure it makes sense, not only for the city but for [the commission].”
Hansen and Hall said the purchase would likely come along with a multimillion-dollar renovation, probably to the rooms and lobby, depending on the chain’s individual standards.
Hansen said he didn’t anticipate a major turnover in staff at the hotel.
“Typically, it serves the new ownership to keep a lot of employees for congruity’s sake,” he said.
Beyond bricks, mortar, leases and renovations, the first question on some people’s minds involves the fate of the hotel’s trademark mallards.
Hansen said the hotel group plans to take care of the ducks.
“They will go on to live long duck lives - maybe in one of the other Peabody locations - and have Peabody duck grandchildren,” he said.
“They will be treated with respect, and I’m sure there will be as much fanfare when they leave as when they first arrived.”
Arkansas, Pages 13 on 06/29/2012