Saturday, March 11, 2006
Auctioneers may have to sell a unit every minute Saturday to get rid of the remaining units at the Steamboat Grand Resort Hotel.
It's been more than five years since the hotel opened, and about one-third of the interests for the 183 condominiums still are for sale by the developer.
That could change Saturday, when as many as 500 people are expected to fill one of the Grand's ballrooms to bid on remaining units.
"This auction here is the Olympics, Super Bowl and World Series of real estate auctions this year," said Richard Keenan, owner of Keenan Auction Co.
The company has nationally advertised the sale of 237 fractional-share units and 35 whole units. Of that inventory, 100 will be sold at absolute auction, meaning there is no reserve price. It will be up to the developer to offer additional units at absolute auction. It is the intention of the developer, American Skiing Co., to sell the remaining shares.
The AAA Four-Diamond resort is Steamboat's largest residential property. It operates as a hotel, but the rooms essentially are owned by an owner or multiple owners who divide the time in the units according to how many shares they own. A person who owns an eighth of a unit has access to about seven weeks.
Since the hotel began marketing the auction last year, 11 fractional shares and three whole units have been sold. The least expensive studio apartment at the auction lists for $22,900 for an eighth of a share. A whole-ownership penthouse lists for as much as $1.775 million.
Construction of the hotel in the late 1990s was plagued by delays and rising costs. The Grand gained national media attention because the underground parking garage could not accommodate high-profile SUVs, and when the hotel opened in October 2000, the dot-com bubble was bursting. The economy was further crippled by the terrorist attacks of Sept. 11.
"The sales could have been faster," said Betsy Wallace, the chief financial officer for ASC. "That would have been helpful for property owners that have bought in."
Because of the accumulated debt, the company that lent most of the money for construction of the hotel will receive 85 percent of the gross proceeds from the units sold at auction.
"Getting this place sold out is the start of a fresh start," said Mike Lomas, general manager of the hotel. "The black cloud has lifted, and we've been selling it as a product."
Selling the units has been a struggle. The group that oversees the hotel, Grand Summit Resort Properties, has adjusted its marketing and sales strategies throughout the years to bolster sales. Wallace said that by auctioning the remaining properties, they can eliminate sales and marketing costs. For current Grand owners, it means they no longer will compete with the developer if they decide to sell their shares.
"Once the hotel is completely sold out, then the prices usually end up going up," said Keenan, whose company successfully auctioned remaining shares at the Grand resort in Attitash, N.H., which also is managed by GSRP. The properties could appreciate, but that is not how they are promoting the property.
"We're not selling it as an investment, we're selling it as a lifestyle," Keenan said.
The condos vary in size from studios to four-bedroom penthouse suites capable of sleeping eight to 12 people.
Many of the condos have interior doors that can separate the unit into private hotel rooms with their own hallway entrances and bathrooms.
Owners can rent their units as hotel rooms, with the hotel taking 45 percent of the rate. The rate for a two-bed suite last Christmas was $649 a night.
In addition to the price of the unit, owners have to pay monthly association fees.
"People come in and say these are high," said David Hartley, directory of real estate sales for the hotel. "They're right."
People probably pay a premium to own shares at the Grand, Hartley said, but that is because the price includes all utilities and the Grand offers all the amenities of a luxury resort. The only thing that is not included in the association fees is house cleaning and taxes. Association fees for people who own a whole unit range from about $1,300 a month for a one-bedroom unit to $5,000 a month for the penthouses.
Keenan, the auction company owner, said 12 internationally known auctioneers will take turns auctioning the units. It could take as long as seven hours to auction off all the shares. He expects all 500 seats in the ballroom to be filled and said many more people will bid online and by telephone.
"There isn't much bigger than this as far as real estate auctions," Keenan said.
For more information about the auction, visit www.steamboatgrandauction.com.