Gaylord Entertainment is selling its hotel brand and the rights to manage its four hotels to Marriott for $210 million in cash, but the Nashville-based company is hanging on to its iconic properties such as the Grand Ole Opry and the Ryman Auditorium.
Under the agreement, Gaylord will continue to own its hotel properties and other businesses. It will reorganize as a real estate investment trust effective January 1 which will include the Opry and the Ryman.
Marriott will receive a management fee from Gaylord for running the hotels.
"As growth in our company slowed as a result of the recession, the inefficiency of our cost structure became very apparent," Gaylord CEO Colin Reed said in a call with investors shortly after the deal was announced Thursday morning.
He went on to address the Opry and Ryman by saying, "there is no intent to do anything with those assets."
"We are not going to have a fire sale with these brands, we believe these brands, particularly the Opry, have the ability to grow," Reed added.
The deal stems from Gaylord's months-long review of strategic options due to what Reed termed "erratic stocks."
Its shares climbed 13% in premarket trading to $39 per share.
Gaylord says Marriott International Inc.'s presence in the hotel industry will help it cut costs and boost revenue. Annual savings are expected to total between $33 million and $40 million.
The deal is contingent on approval from Gaylord stockholders during a meeting now scheduled for August.
Gaylord employs about 4,000 people in Nashville.
Employees were told to not talk on camera but off camera an employee told Nashville's News 2 he found out about the sale through a press release and hadn't heard anything else from his employer.
Greg Adkins, CEO of the Tennessee Hospitality Association, says the sale likely won't impact employees.
Adkins said he predicts there will be a long transition in management which may be good news for Opryland employees because they may have more opportunities to move around to other Marriott properties.
One financial observer who did not want his name disclosed told Nashville's News 2, "The jobs of those working in the hotels will be fine, those in upper management now with Gaylord, that's where there are typically cuts in these kind of deals."
Thursday, August 28 2014 3:28 PM EDT2014-08-28 19:28:07 GMT
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