CSX has announced the hiring of Goldman Sachs to explore the possibility of selling The Greenbrier, one of the country's last grand resorts.
The 6,500-acre Greenbrier Resort, of West Virginia, is one of America’s oldest resorts. Dating back to 1778, it is listed on the National Register of Historic Places and includes a sprawling 721-room Federal-style hotel
The Greenbrier Resort lost $35 million in 2008, while its parent CSX faced the sharpest decline in railroad freight volume in decades as a result of the sudden global economic downturn.
The third largest U.S. railroad by revenue also has five new directors on its 12-member board, the outcome of a highly contentious proxy battle last year between CSX and some activist hedge funds that questioned the company's investments and called for a management overhaul. Despite the company's track record of solid growth and conservative investment the board took a major hit.
CSX Corp. said Friday in a press release that Goldman will consider options for making The Greenbrier a viable business entity. Michael Ward, CSX's chief executive, said in a statement that the 230-year-old hotel is "at a crossroads." He added that the resort "faces even more difficult challenges in 2009. It is imperative that we respond to this situation without delay." Read the full CSX Corp press release here.
"It doesn't surprise me now that you have a new board in place that this is one of the first things they would look at," said Arthur Hatfield, an analyst with Morgan Keegan & Co. Learn more about the McIntire Group at Morgan Keegan here.
The Greenbrier tried in vain to get ahead of the game, by undergoing a massive $50 million dollar renovation and across the board re-branding in 2007.
But let the Greenbrier serve as a reminder to all that, "New and Improved is not Necessarily Better"
The Greenbrier has been the "go to" summer retreat for countless families over the last century and a half, two years ago the resort closed for three months to under go a transformation.
The "improvements" included parting ways with the decade's old "Dorothy Draper" interior design style as the aged Carlton Varney tried to re-invent himself and dumping the traditional "Modified American Plan" an all inclusive dinning arrangement, in place for nearly 100 years. Also gone in the required jackets (even for children) evening dinning, in its place a more casual environment.
The resort, a favorite of Carolinians during the long hot summers also continued to push accommodation rates into the stratosphere, while looking more aggressively at "non-family" corporate revenue.
But the push for corporate dollars and "improvements" has back fired, as families who were the bread and butter core of the Greenbrier operation, whose week long summer retreats were more of habit then price consideration have become to feel marginalized.
It doesn't help that the resort was without their "Five Diamond" status for 3 years and at the same time convinced the local voters that jobs would be lost unless they approved management's plan to offer legalized gambling, bringing Hooters style cocktail waitresses and menus along with slots and black jack tables to the once family resort.
Even the treasured staff have become rather unpleasant, and who could blame them, after a four month forced furlough in 2007 and a continuing labor dispute with management. CSX is in prolonged contract negotiations with hotel employees, who have been operating without a contract for nearly a year.
The Greenbrier has survived the Civil War, two World Wars, a Great Depression and countless recessions, but that was before the corporate motto of "greed is good" started running the operation.
In the push to garner more of the almighty corporate dollar, The Greenbrier has lost her way.
The hotel and resort once the respite of choice from lowcountry heat has suddenly found herself in the "new age" of the hospitality business. A holdover from the days of the all important railroad, parasols and gentleman who tipped their hats she has endured time and change. One can only hope that her suitor will understand the grand hotel's place in history and so many family lives.