Financing of Hyatt appears resolved

Deal expected today removes last hurdle to convention hotel

Labor union insurer is key

March 03, 1999|By Kevin L. McQuaid | Kevin L. McQuaid,SUN STAFF

Peter G. Angelos and Hyatt Hotels Corp. are expected to finalize today a financing agreement for a long-planned $175 million hotel attached to the Baltimore Convention Center, eliminating the last major hurdle to the 850-room project.

The agreement with Union Labor Life Insurance Co. could lead to a construction start on the 22-story project this summer.

Under terms of the financing package, Angelos and the Chicago hotel chain would each invest at least $25 million in the project, while Union Labor Life would provide the balance of the funds.

"We continue to be optimistic about the project," said Gary Ross, a Hyatt spokesman. "There are still documents to be signed, there are still T's to be crossed and I's to be dotted.

The new Grand Hyatt would be built on city-owned land and connected by a walkway to the Baltimore Convention Center across Howard Street.

Roughly $25 million of the financing would go to building a parking garage connected to the hotel. The garage, with up to 1,000 spaces, is expected eventually to be taken over by the city.

The Grand Hyatt is one of seven new hotels being planned for downtown that would collectively add more than 3,000 rooms to the city's stock of 4,500 rooms. Of the seven, only one is under construction -- the $134 million Wyndham International Hotel in the 20-acre Inner Harbor East project.

The lack of construction has begun to worry city and state officials, who fear future convention bookings will be jeopardized unless sufficient hotel rooms are available.

Although basic details of the financing agreement have been in place for months, Hyatt officials froze the deal because Union Labor Life stipulated that if it were to finance the project, Grand Hyatt employees would have be unionized, sources said.

Union Labor Life is a Washington insurance and financial services holding company owned by labor organizations and related companies.

Hyatt officials had objected to the union stipulation, noting that in most cases, organized workers earn more, thereby increasing operating costs, and that labor agreements decrease management flexibility.

Under the new agreement, nonunion Hyatt employees at the existing 487-room Regency hotel at 300 Light St. are expected to be unionized as well, since the chain and Angelos agreed to market the two hotels as a single entity to attract larger conventions.

Angelos represents unions

Angelos, a lawyer who represents several labor organizations and won millions of dollars in claims for union workers exposed to asbestos, arranged the Union Labor Life financing. It could not be determined whether he pushed to have the hotel's workers unionized.

Angelos hopes Union Labor Life's participation and a unionized work force will attract organized labor and other large conventions to Baltimore, sources said.

Neither Angelos, who is the Orioles' principal owner, nor representatives of Union Labor Life could be reached for comment yesterday.

"There's a lot of what we call `complexing' going on in the business, where multiple hotels are marketed together, especially in the larger markets with larger hotels," said Michael Mahoney, director of hospitality and leisure consulting at PricewaterhouseCoopers, one of the nation's largest consulting and accounting firms.

"Hyatt does an excellent job with conference and convention center business, and that's reflected in the Grand Hyatt in Washington, D.C., in the business they do, and the contribution they make to conventions going there," Mahoney added.

Part of $1 billion expansion

Hyatt has hotels under construction in Calgary, Alberta; Chicago; Rosemont, Ill.; Pittsburgh; Las Vegas; and the island of St. Lucia in the Caribbean, said Ross, the Hyatt spokesman.

The company is also contemplating building a $62 million convention center hotel in Philadelphia to meet the needs of the Republican National Convention there next year.

Other Hyatt hotels are planned in Cambridge, Md.; Naples, Fla.; and New Mexico, part of a $1 billion effort that began in February 1997 to increase the size and scope of the Hyatt portfolio.

In all, Hyatt controls 102 hotels in the United States with 53,000 rooms.

Pub Date: 3/03/99

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