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Luxury Resorts are still Struggling from AIG Effect

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

AIG Building To Become Luxury Condos

by Deidre Woollard (RSS feed) —

Filed under: Real Estate Developments

Earlier this year, NY Post reported that AIG was trying to earn around $100 million by selling its 66-story Art Deco headquarters at 70 Pine Street in Manhattan (it actually sold to Young Woo for $150 million). Now it seems that the real-estate developer might have gotten a great deal. Young Woo will be turning the top 40 floors of AIG's 66-story headquarters near Wall Street into condo units. The Wall Street Journal does the math which shows that even including renovations and other costs the units could generate about $600,000 in profit each. This of course is providing that the Manhattan real estate market doesn't dip too much further down and eventually comes back up. Given that it will likely take the developer a while to prepare the condos for occupation and work up a snazzy marketing campaign, the timing might be ideal.

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Tags: aig, condominium, condos, manhattan, new york city, NewYorkCity, nyc, wall street, WallStreet, young woo, YoungWoo

Manchester United Seeks New Deep-Pocketed Sponsor

by Deidre Woollard (RSS feed) —

Filed under: Sports

Remember AIG's shirt deal with soccer team Manchester United? AIG had a four-year $100 million deal which runs until 2010 but will not be renewing, leaving the team with the prospect of finding a new sugar daddy and it's looking like it has set its sights on India. India's Sahara Group is in talks with Manchester United to become the new shirt sponsors. Sahara, an unlisted group with interests from financial services to real estate, sees it as a way to encourage Indian soccer players and fans. For the team, it represents a chance to expand their global fanbase. This seems to be a growing trend in sports, that a team has fans that spread far beyond the hometown, but nowhere is it more true in European football which, although not big in the U.S., truily is a global sport.

Reuters reports that another Indian conglomerate, Tata group also received a sponsorship proposal from Manchester United back in March. The Sahara deal will likely be similar to AIG's contract and in the same price range. Sahara's Subrata Roy is expected to be in London on June 5 to finalize the deal.

Tags: aig, india, manchester united, ManchesterUnited, sahara, soccer

AIG Looking For A Billion Dollar Sale In Japan

by Deidre Woollard (RSS feed) —

Filed under: Real Estate Developments

Embattled insurer American International Group (AIG) might be getting a billion-dollar boost through a real estate deal. Bloomberg reports that AIG is involved in a deal to sell its Tokyo headquarters building, shown above, to Nippon Life Insurance Co., Japan's largest life insurer, for close to a nice round billion. The 15-story tower is located in central Tokyo's Marunouchi district, the most expensive office district in Japan, next to the Imperial Palace, and the price certainly doesn't suggest that it's an emergency sale. Commercial values in Tokyo did fall over six percent last year and office vacancy but it is still the third highest city in the world for office real estate. In March AIG was said to be looking to earn a far smaller number, around $100 million by selling its 66-story Art Deco headquarters at 70 Pine Street in Manhattan.

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Tags: aig, commerical real estate, CommericalRealEstate, japan, nippon life insurance, NipponLifeInsurance, tokyo

Manchester United Shirts Add To AIG Outrage

by Deidre Woollard (RSS feed) —

Filed under: Sports

Washington continues to express outrage over AIG's $165 million in bonuses but AIG has another bill to pay, for its contract with soccer team Manchester United. Like some companies which pay for naming rights for stadiums, AIG signed a contact in 2006 for a four-year deal with the British team to have AIG on their shirts. Cityfile reports that while the company has said they won't renew the deal, they haven't canceled the existing contract which means that Manchester United could get $28 million more from the team before the original contract ends in May 2010.

The deal was originally made by then Chief Executive Martin Sullivan who wanted AIG to be a name recognized worldwide by partnering with one of the world's most popular sports teams. BNET has a cheeky suggestion on what the American people should request from AIG in regards to this deal. They say that since we own 80 percent of AIG we could have the shirts changed to say "United States United" or even USA. Of course, BNET's Ed Leefeldt also says maybe it's time to give a name change to "Citi Field" which received millions from struggling Citigroup. Good luck with that.

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Tags: aig, manchester united, ManchesterUnited, soccer

AIG Hopes To Sell NYC Building

by Deidre Woollard (RSS feed) —

Filed under: Real Estate Developments

A prime piece of New York City real estate may be up for grabs. The NY Post reports that AIG is trying to earn around $100 million by selling its 66-story Art Deco headquarters at 70 Pine Street in Manhattan. An AIG spokesman says that AIG is considering selling its building but that no sales price has been decided upon. But the Post says that AIG hired CB Richard Ellis and brokers Darcy Stacom and Bill Shanahan sent an e-mail to potential buyers about the views from the building.

Unfortunately AIG's building isn't worth what it would have been a couple of years ago when the commercial market in Manhattan could have brought in over $300 million. Local 32B-32J of the International Service Employees Union is reportedly interested in keeping 70 Pine as an office tower.

The tower is the fifth tallest building in New York and has been owned by AIG since the 1970s. The sale of the building likely won't even begin to cover the most recent $165 million payout in employee bonuses which has lawmakers fuming this week.

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Tags: aig, manhattan, new york city, NewYorkCity

Big Financial Firms Keep Their Jets

by Deidre Woollard (RSS feed) —

Filed under: Wings

The car companies may have gotten in trouble for their corporate jets, but as the AP reports, private jets are still flying for Wall Street's firms. They report that six financial firms that received billions in bailout dollars haven't sold off their jets. In fact they are still in use to carry executives to company events and sometimes personal trips. In many of these cases, the CEO is required to use a private jet for security reasons. AIG has seven planes but a spokesman reports they are being used sparingly. The company sold two jets earlier this year and is selling or canceling orders for four others. Citigroup's aircraft are being used a by a few executives but the execs are "encouraged to fly commercial." Morgan Stanley has two jets. JP Morgan owns four Gulfstream jets including a a 2007 ultra-long range flagship G550 model, a plane that sells for around $47.5 million. Bank of America has nine planes including four Gulfstreams. Wells Fargo owns a single jet that is strictly for business use.

While SEC rules require that publicly held companies disclose executives' personal use of corporate aircraft, the line between personal use and business use can often be hard to determine. Overall, companies are cutting back on the use of the jets for any reason that can seem frivolous. They haven't had to travel to Washington to beg for money yet but if they do, likely they'll leave the fleet at home.

If you are shopping for a jet, the picture above is from a used Gulfstream GIV-SP listed at $25.95 million.

Tags: aig, citigroup, jets, morgan stanley, MorganStanley, private jet, PrivateJet, wells fargo

AIG Partied At The St. Regis Monarch Beach

by Deidre Woollard (RSS feed) —

The House of Representative's Committee on Oversight and Government Reform is holding a hearing on the decline of American International Group (AIG) and they have revealed some stories of lavish spending. In fact, Businessweek reports that just days after the New York Fed gave the company and $85 billion handout, $443,343.71 was spent on a subsidiary's executive retreat at the St. Regis Resort Monarch Beach in Dana Point, California. The bills for the event included nearly $7,000 in golf fees and $23,280 in spa treatments. USA Today quotes Rep. Elijah Cummings, D-Md. who told the committee that AIG spent $200,000 for hotel rooms, and almost $150,000 for catered banquets. Given the current economic crisis this revelation doesn't sit well with many people.

UPDATE: Given the attention to the outrage generated by the story of this retreat, ABC News reports that AIG has canceled a second one which was to be held at the Ritz-Carlton in Half Moon Bay.

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Tags: aig, dana point, hotel, lavish spending, LavishSpending, st regis, StRegis

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