Barton Creek Resort & Spa in Austin, Texas |
KSL Resorts, which owns and operates some of the most well-known vacation retreats in the world, will add two legendary resorts to its portfolio—The Homestead in Hot Springs, Va., and Barton Creek Resort & Spa in Austin, Texas—through the acquisition announced last month of ClubCorp, Inc. by one of the KSL group’s investment arms, KSL Capital Partners.
The acquisition is expected to be completed by December 26, immediately following the separate sale of ClubCorp’s most well-known holding, Pinehurst Resort, to the Robert Dedman family.
The two transactions, which are subject to customary closing conditions, have an aggregate transaction value of about $1.8 billion.
Dallas-based ClubCorp, which was founded in 1957 by Robert H. Dedman Sr., and first announced it was exploring a sale this summer (C&RB, June 2006, p. 6), has grown to own or operate nearly 170 golf courses, country clubs, private business and sports clubs, and resorts, and had annual gross revenues of $1.04 billion in 2005. Other ClubCorp properties include Firestone Country Club, Akron, Ohio; Vista Vallarta, Puerto Vallarta, Mexico; and Mission Hills Country Club, Rancho Mirage, Calif. With 18,000 employees, ClubCorp serves nearly 200,000 member households and 200,000 guests each year.
John Beckert, ClubCorp’s Chief Executive Officer, says the transaction provides the desired liquidity for company shareholders.
Beckert | Berg |
“That is really the driving force behind the sale,” he adds.
KSL Capital Partners, with offices in Denver and La Quinta, Calif., is a private equity firm with more than $1 billion in committed capital investments. The company specializes in travel and leisure enterprises in five primary areas—hospitality, recreation, clubs, real estate, and travel services. Notable investments made by KSL principals include La Costa Resort and Spa, Carlsbad, Calif. (C&RB, April 2006); Hotel del Coronado near San Diego; Rancho Las Palmas Resort & Spa, Rancho Mirage, Calif.; La Quinta Resort & Club and PGA West, La Quinta, Calif.; and Doral Golf Resort & Spa near Miami.
Arthur Berg, Vice President of Marketing for KSL Resorts, predicts a seamless transition in the management of The Homestead and of Barton Creek. “We’ll move those two properties into our collection so that they’re sister properties with our other legendary resorts,” he says.
KSL Resorts, KSL Capital Partners’ independent management company, runs destination resorts that are noted for their architecturally significant properties, championship-level golf and spa amenities, cutting-edge restaurants and high quotients of repeat patrons.
“One of the things that will make this marriage really successful is that the resorts that we have operated in the past are very similar to The Homestead and Barton Creek,” Berg notes.
“ClubCorp as it exists today will continue,” he adds. “They are the leaders in the field. They are highly respected.”
With ClubCorp senior management continuing to run the remaining properties, he says, “I think, for the most part, it will be business as usual.”
Beckert, who calls the willingness of private equity firms to pursue private club and resort businesses “a positive sign,” agrees.
“In companies our size, there’s constant change, and strategic plans are being revised and changed every year,” he notes. “But, at this time, there are no specific plans to make changes in operations.”
KSL and ClubCorp also have committed to a combined capital investment of $150 million in the next two years, to continue reinvesting in ClubCorp properties and to meet expansion needs.
“KSL Capital Partners has access to significant capital because we believe one of the things we can bring to the table is the ability to improve the club, which is always beneficial to the members,” notes Berg.
Members and guests will see little difference in short-term operations at the properties, he says. “Over time,” he adds, “I think the members will see the results of additional capital being put into their clubs.”
KSL Capital Partners’ expertise and capital will allow ClubCorp to expand its enterprise and create new business opportunities, Beckert feels. “We expect to continue to reinvest in our existing assets, and we expect to continue to be the world’s leader in private clubs,” he says.
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