Aspen’s Limelight Lodge seeks capital for survival
December 22, 2009
ASPEN – Money problems at Aspen’s Limelight Lodge has prompted its owners to look for more financing.
Dale Paas, owner of the 126-room hotel, said the property is not under contract with a potential buyer despite the rumors that have been floating around town for the past two weeks.
He is, however, looking for investors or a partner who can infuse capital into the operation, which has been hit hard as a result of the economy.
Debt on the property is mounting and two of the 14 condos at the adjacent Monarch on the Park haven’t sold. The proceeds from the sales of the condos were designed to pay for the debt on the 100,000-square-foot hotel.
Paas said the sale of the two remaining condos equates to an estimated $16 million in revenue that hasn’t been realized. All of the units were priced between $3 million and $15 million when they were listed.
But apparently that revenue stream hasn’t been enough to keep up with the rising costs of doing business, paying the debt service and weathering the recession.
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“We’ve got to get financing from somewhere and we’re trying to get as creative as possible,” Paas said, adding he’s been in negotiations and discussions with several potential partners but nothing has come to fruition.
He said his first preference is to secure financing and keep ownership of the hotel. Paas is part of four generations that have run the family-owned and operated business since the 1950s when the Limelight operated as a bed-and-breakfast style lodge.
The other option is to find a partner or sell the property, the latter would be the last resort, Paas said.
“We are doing our best to find a financial partner to help run the place,” he said. “We are trying to look at all of our financial options, and we’ve got to be proactive and plan for the future.”
The original business model was based on a 2005 economy. And while business has been good this year, with strong bookings for Christmas and January, the room rental revenue can’t keep pace with escalating costs.
Paas gave one example of an unanticipated cost of doing business – a $450,000 property tax bill. That’s double what it was last year, he added.
Each month, Paas said he struggles to find enough money to pay the bills, loans and operational costs associated with the hotel.
“These are difficult financial times for everyone in the resort business,” he said. “We’re praying a lot.”
The hotel – which cost tens of millions of dollars to build – was approved in 2006 after years of review and controversy in the community over its size and impacts to downtown.
Paas told The Aspen Times in October 2008 that he and his family liquidated most of what they owned and financed the rest to pay for the new hotel. He said at the time that it might take 10 years to pay off the hotel and get the business to break even.