By Michael Matthews
February 11, 2010 -- They are dropping like flies in the hotel business.

The latest to go: the five-diamond Ritz-Carlton Lake Las Vegas. The 349-room resort, which opened in 2003 and has been operating in bankruptcy since 2008, closes its doors forever on May 2. About 320 of Ritz-Carlton's "ladies and gentlemen" on the Lake Las Vegas staff will be unemployed unless Ritz's corporate parent, Marriott, finds them new gigs.

Meanwhile, The Mansion on Peachtree, a hotel in Atlanta managed by Rosewood Hotels and Resorts, has just sold for $66 million against a debt of $200 million.

In my last column, I explained that a profitable hotel needs to rent rooms for $100 a night for every $100,000 that the property cost to buy or build. That means the 127-room Mansion will need an average nightly rate of more than $500 to make it in its new reincarnation. That's going to be a tough haul. The hotel's new owners have some condos to sell off, which could reduce the $66 million purchase price. But they better start selling them soon or the hotel won't have a hope of surviving. After all, Atlanta is not a $500-a-night hotel town.

But back to the Ritz-Carlton Lake Las Vegas, which is located in a purpose-built, 3,600-acre resort community about 14 miles from The Strip. The Ritz went under for $540 million owed to Deutsche Bank, which pulled the plug rather than continue spending money on daily operations. According to the Las Vegas papers, a local businessman said he was offered the Ritz-Carlton for just $20 million, or $57,300 a room. If his total commitment really would have been just $20 million, this unnamed businessman made a big mistake. At that price, he could have reflagged the resort, rented rooms for less than $60 a night and made a heap of money for years to come.

Then there's the matter of Carl Icahn, the corporate raider whose one recent attempt to run something he purchased for pennies on the dollar, TWA, helped hasten that airline's demise. The 73-year-old Icahn is a much savvier investor than hands-on airline manager, however, so it's worth noting his latest financial foray. He's in the process of buying the bankrupt and unfinished Fontainebleau resort on the Las Vegas strip for $156.5 million. The 27-acre, 63-story resort is 70 percent complete and has already cost $2 billion. According to news reports, it'll take another $1.5 billion to finish. Whether Icahn can spin this dross into gold remains to be seen, but it'll be fun to watch.

(By the way, the Las Vegas version of the Fontainebleau was being developed by a real-estate magnate named Jeffrey Soffer, who, with his Dubai-based partners, also owns the original Miami Fontainebleau. The iconic Miami property is not involved in the Icahn bid.)

Meanwhile, the biggest hotel in Macon, Georgia, the 298-room Ramada Plaza, will be sold at an absolute auction next month. The 30-year-old hotel was generating more than $6 million annually in revenue just a few years ago. And in Hawaii, the old Maui Prince Hotel will be sold at a foreclosure auction in April. The 310-room hotel, its two golf courses and 3,100 acres of undeveloped land sold for $575 million in 2007. An unhappy lender is trying to recoup a $192 million mortgage in the sale. Rooms at the hotel, now called the Makena Beach and Golf Resort, are currently renting for less than $200 a night including breakfast.

Here in my hometown of Tucson, we have some pending bad news, too. We have a brand-new Ritz-Carlton, the 250-room Dove Mountain Resort. It officially opened in mid-December and cost an estimated $500 million. The Accenture Match Play golf tournament will be contested here next week. After that, I fear, the property is headed for the rock pile. Ticket sales are terrible--needless to say, Tiger Woods' presence is sorely missed--and the hotel's occupancy rate is horrible.

The hotel was meant to be the catalyst for sales of real estate at the 6,200-acre Dove Mountain, a self-proclaimed "master planned golf resort community" in the Sonoran Desert town of Marana. But real estate in Dove Mountain has not been moving in this economy. And that's an understatement. Frankly, I don't see the Ritz-Carlton surviving.

Watch this space as more giants fall. If you've got a few million to spare, there are some incredible bargains out there right now. Consider making an investment. I could run the hotel's pub for you.

ABOUT MICHAEL MATTHEWS Michael Matthews has managed and marketed fine hotels around the world for more than 45 years. He spent 14 years in Hong Kong building the legendary Regent International group. He has also worked with St. Regis, Ritz-Carlton and Rosewood hotels. Matthews is currently based in Arizona. He began writing Do Not Disturb in early 2004.

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