Luxury Resorts are still Struggling from AIG Effect

by Carrie Coolidge (RSS feed)
Nov 19th 2009 at 11:44AM

The "AIG effect" is still affecting the luxury resort industry.

Indeed, businesses started toning down lavish corporate events after American International Group, the insurance giant, was widely criticized for holding a conference at a luxury resort days after it received a cash infusion from Congress in 2008.

Many resorts that have a heavy dependence on group business are still struggling. The latest victim is Amelia Island Plantation. Last week, the 1,350-acre luxury enclave overlooking the Atlantic Ocean in northeast Florida filed a voluntary petition for Chapter 11 bankruptcy protection.

The resort is very dependent on its group business, which has dropped precipitously over the past year, according to Richard Goldman, its chief marketing officer. "More than half of our business is from corporate groups that hold conferences here," says Goldman. "The AIG effect has basically scared off folks -- even businesses that could afford to have meetings -- who are afraid to hold conferences at resorts."

The company will operate as "business as usual" during the reorganization and an investor group, comprised of Amelia Island Plantation residents and club members, has already collected to aid the resort.

Amelia Island Plantation isn't the only hospitality company struggling during the recession. In Scottsdale, Ariz., the W Hotel recently staved off foreclosure and the InterContinental Montelucia Resort, also in Scottsdale, faced possible foreclosure earlier in the year. The Tropicana Las Vegas casino and the Ritz-Carlton Lake Las Vegas emerged from bankruptcy this year.

This week, Citigroup reached a tentative agreement to sell the very same resort that started the whole mess in the first place. The St. Regis Monarch Beach resort in Dana Point, Ca., made headlines last year when it hosted a group of AIG executives at a retreat just days after the government bailout of the company. Citigroup seized the St. Regis from its owners last summer, after they failed to make payments on the bank's $70 million loan on the property.

Tags: AIG, amelia island concours, amelia island plantation, AmeliaIslandConcours, AmeliaIslandPlantation, American International Group, AmericanInternationalGroup, Citigroup, Intercontinental Montelucia Resort, IntercontinentalMonteluciaResort, recession, Ritz-Carlton Lake Las Vegas, Ritz-carltonLakeLasVegas, St. Regis Monarch Beach, St.RegisMonarchBeach, Tropicana Las Vegas, TropicanaLasVegas

Filed under: Luxury Travel & Hotels

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Reader Comments (Page 1 of 1)

Terry Nov 30th 2009 11:15AM

I am sorry for the problems these luxury resorts are facing, but the problems were created by the resorts and the greedy developers who designed and built them. Companies should not be spending company funds to hold lavish retreats for highly paid executives and their cronies. That money comes out of profit, which should be going to the stockholders of the company. Why is it that the executives think it is their right and privelege to host these lavish retreats at stockholder expense? If the executives and their associates want to have a meeting at a luxury resort, then let them pay for it out of their own pockets and not the pockets of stockholders.

wrascil Nov 30th 2009 11:45AM

now only state and government officals can go th these exclusive resorts on the TAX PAYERS DIME

MyKisa Dec 1st 2009 5:41AM

it was not the AIG effect as much as it was the "lefty" effect....all the elected realize that Americans are so envious of those that have, it is justifiable to use tax law to steal, and then point the finger at anyone who dare spend money on theoir own free will