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09/20/2011

Hotelier Used Barter In His Turn Around Success

Boom-and-bust hotelier Laurence Geller has recently, through a string of clever deals, rescued Strategic Hotels & Resorts and its 17 trophy hotels from the brink of financial ruin. The 63-year-old Englishman built his career clashing with hotel giants such as Marriott International over costs for managing his hotels and with unions.

(Geller�s hotels include four Four Seasons, two Ritz-Carltons and a stake in the historic Hotel Del Coronado near San Diego.)

The company�s stock hit a low of 61-cents in 2009, and recently traded at $5.12. Strategic�s resurgence under Geller was due to his creative thinking, unusual restructuring, and refinancing of their debts.  As well, he recruited deep-pocketed partners to recapitalize some of his debt-saddled hotels.

Another deft move was to reduce his debt by buying hotels with company stock rather than selling assets. For example, he used stock to acquire Four Seasons hotels in Jackson Hole (WY) and Palo Alto (CA), as well as bartering with stock to buy out Strategic�s partner in the InterContinental Chicago. The market value of the company�s stock is roughly $950 million after hitting a low of $54 million in 2009.


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