Jul242013

Marriott Brands Chain Gang battling Marriott in Gaylord Rockies Development

Marriott has problems in the Rocky Mountain State since acquiring the Gaylord convention center hotel brand. A petition submitted by 22 hotels in the Denver area to the Colorado state economic development chief Ken Lund is requesting the 1,500 rooms Gaylord Rockies Hotel and Conference Center reapply for an $81.4 million tax incentive package formerly approved for the project prior to the Gaylord brand being acquired by Marriott International.

Six of the 22 hotels joining the petition are Marriott brand hotels including the Ritz-Carlton Denver and Bachelor Gulch, JW Marriott Denver, Marriott Denver Downtown, Renaissance Denver Hotel and Courtyard by Marriott Denver Downtown.

On one side, the hotel owners and operators claim Marriott will control 48% of the convention space in Colorado after the Gaylord Rockies Hotel and Conference Center is completed in Aurora, Colorado, a suburb southeast of Denver. This is a much more concentrated convention space within one hotel chain than the initial proposal previously approved for tax incentives prior to Marriott International gaining control of the four major Gaylord convention properties in Orlando, Washington, D.C. area, Nashville and Dallas.

For the existing owners of Marriott brand hotels who have joined in the petition, this rift shows the tension that can arise when the hotel operating and franchise company decides to build a hotel brand within the chain that will likely result in the loss of convention business for the existing hotels in the downtown Denver area. Marriott International is not in the business of owning hotels, rather the hotel chain helps finance hotels and manage hotels without owning the assets. Marriott International makes its income from franchise and management fees. Marriott has offered a $60 million loan to help finance the Gaylord Rockies construction.

The owners of the existing Marriott brand hotels generally have clauses in their agreements to prohibit the development of another brand in the same hotel chain within certain proximity to their property. That is my non-lawyer understanding of how these arrangements work based on hotel finance meetings I have attended where the topic was discussed.

Aurora as a Denver suburb can probably get by on the proximity issue, but the size of the Gaylord convention centers is designed with the ability to accommodate large groups. Convention organizers will likely find a more competitive rate and more availability for hosting a convention away from downtown Denver in a 1,500 room conference hotel.

The full story is in yesterday’s Denver Post: Petition against Gaylord Rockies hotel in Aurora exposes Marriott rift.

 

Ric Garrido, writer and owner of Loyalty Traveler, shares news and views on hotels, hotel loyalty programs and vacation destinations for frequent guests.

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About Ric Garrido

Ric Garrido of Monterey, California started Loyalty Traveler in 2006 for traveler education on hotel and air travel, primarily using frequent flyer and frequent guest loyalty programs for bargain travel. Loyalty Traveler joined BoardingArea.com in 2008.

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