Baha Mar replaces Morgans as hotel management partner
Guardian Business Editor
Published: Jun 05, 2014
Baha Mar has signed a new hotel management agreement (HMA) for its 300-room lifestyle hotel with SLS Hotels following the termination of its hotel management agreement with Morgans Hotel Group amidst an ongoing legal dispute.
“The management agreement between Baha Mar and Morgans has been terminated and we have now entered into an HMA with SLS Hotels to operate the 300-room lifestyle hotel. Baha Mar is scheduled in December 2014 and SLS will open in December along with the rest of Baha Mar,” said Robert Sands, senior vice president of administration and external Affairs for Baha Mar, in an interview with Guardian Business.
The signing comes just five months ahead of the intended December 1, 2014 opening date for the $3.5 billion Baha Mar resort and leaves the company with much to do to get up to speed.
The original hotel management agreement between Baha Mar and Morgans Hotel Group was signed in mid-2011, and the company had a general manager in place at the property for the past 11 months.
According to a statement from Baha Mar, the 20-year agreement signed with SLS was for the management of the hotel, its restaurants and nightlife. The company will also bring its “distinctive service, style and sophistication” to the 107 residences that form part of the hotel.
SLS Hotels is a division of the privately-owned global hospitality company, sbe, founded by Persian-American businessman, 39-year-old Sam Nazarian,who is also its chairman and chief executive officer.
Nazarian made his fortune in the tech industry and launched into hospitality in 2001. SLS at Baha Mar will be the brand’s first international venture.
Guardian Business exclusively reported in late April that Morgans Hotel Group had moved to terminate its agreement with Baha Mar on March 26, 2014 following a dispute over Baha Mar’s inability to obtain a
non-disturbance agreement (NDA) from its lender, the Export Import Bank of China, that would have protected Morgans’ rights in the case of foreclosure. The termination officially became effective on April 25.
Speaking with Guardian Business, Sands said: “The SLS partnership with Baha Mar highlights Baha Mar’s appeal as a world class resort and gaming destination, and secondly this deal highlights Baha Mar’s unstoppable momentum for opening in December 2014.”
Commenting on the signing with the new hotel partner, Sarkis Izmirlian, Baha Mar’s chairman and chief executive officer, said: “SLS will bring a spark of creativity and fun that fits in brilliantly with Baha Mar’s distinctive array of brands and partners. Sam Nazarian’s ability to be ahead of market trends has differentiated his eclectic hotels, nightlife, restaurants and cutting-edge design and will bring a truly unique experience to Baha Mar guests. Also, the company’s experience in creating, selling and managing luxury real estate properties will bring additional value to the SLS residences at Baha Mar.”
Nazarian said the partnership between SLS and Baha Mar “represents a collaboration of best-in-class hospitality partners led by Sarkis’ unbelievable vision”.
He called Baha Mar “a perfect fit with our core strategy of developing and managing luxury lifestyle hotels and residences aimed at higher-end leisure and business travelers”.
Tom Dunlap, Baha Mar’s president, added of SLS: “They live and play in the markets we most want to attract: Miami, Las Vegas, Latin America. We are thrilled to welcome SLS to Baha Mar.”
Both SLS Hotels and Morgans market themselves as “lifestyle” hotel brands that look to appeal to young and hip clientele with design-oriented properties that differentiate themselves from traditional corporate hotels.
Additionally, Morgans and SLS Hotels presently both operate only in the U.S., but are looking to expand both in the U.S. and worldwide. SLS Hotels operates properties in Beverly Hills, California and Miami Beach, Florida.
Morgans had looked to add The Bahamas, Moscow, Cartagena, London, Doha and Istanbul in the near future, while SLS Hotels has a hotel set to open in China in 2015, in addition to five more hotels in the U.S. by 2016.
In signing with SLS Hotels, Baha Mar has entered into a partnership with a significantly younger company than Morgans. While SLS came into being in 2001, Morgans was established in the 1980s and has been credited with introducing the boutique hotel concept.
An ongoing legal dispute is playing out in the New York Supreme Court relating to Baha Mar’s intent to access $10 million in “key” money which was to be provided by Morgans to the resort developer had their HMA continued.
Baha Mar was accused by Morgans of wrongfully attempting to draw down on the money days before the HMA was formally terminated.
Speaking of this outstanding issue between the two sides, Sands said: “We are hopeful we’ll be able to resolve all of the remaining issues”.
In court filings on behalf of Morgans in the New York State Supreme Court, assistant general counsel for the company, Christina Hassan, had revealed that the company had gone on to ask Baha Mar to consider pushing back the opening date of the hotel to April 2015 over concerns that the December 2014 opening was no longer a “reasonable” target.
Court filings disclosed that Morgans stayed on for some 30 days following the official termination of its contract to aid the transition to a new partner, but Baha Mar does not appear to have accepted the recommendation of a delayed opening.