Wednesday, June 9, 2004

Ketchum hotel in jeopardy

Barsotti considers ‘throwing in the towel’

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By GREGORY FOLEY
Express Staff Writer

The future of a proposed 80-room luxury hotel in central Ketchum appears to be in jeopardy, after developer Brian Barsotti announced this week that he is extremely close to abandoning the project.

The approximately 48,000-square-foot former site of the Bald Mountain Lodge in central Ketchum had been partially cleared to accommodate a new 80-room hotel. But property owner Brian Barsotti said this week that he is considering putting the property up for sale for approximately $7 million. Express photos by Willy Cook

Barsotti, who for four years had planned to build a hotel on an approximately one-acre parcel at 151 Main St., said Monday that he intends to put the proposed hotel site up for sale soon.

"I was very hopeful of being in the ground this summer, but that is not going to happen," Barsotti announced Monday at Ketchum City Hall.

The statement came just three months after Barsotti announced that he had brought on Mariel Hemingway, the granddaughter of acclaimed author Ernest Hemingway, as a 50-percent partner in the project. The move gave Barsotti renewed confidence that he could attract investors and a recognized hotel operator for the estimated $35 million to $40 million project.

"We’ve talked to Four Seasons, we’ve talked to Hilton, we’ve talked to Marriott, and none of them are interested," Barsotti said Monday.

All told, "14 or 15" high-profile hotel operators declined to become involved in the project, Barsotti said.

Ironically, Barsotti issued the majority of his statements before the Ketchum City Council, as the council discussed new zoning code language designed to encourage the development of hotels in the city’s commercial core.

Despite the somewhat hopeless nature of his comments, Barsotti declined to confirm that he had completely "thrown in the towel" on the proposed hotel, which was planned to take the place of the defunct Bald Mountain Lodge.

The developer said he is planning to travel to New York City later this month to engage in negotiations with an established investor there.

However, he said the investor—like others approached since the hotel plan was approved by the city last September—is not interested in becoming a partner in the project unless the majority of the rooms can be sold as so-called "fractional-ownership units."

Barsotti said the hotel industry in the last two years has gravitated sharply toward projects that allow for the sale of the individual residential units to fractional owners who purchase specific blocks of time.

Developing fractional-ownership units raises large sums of money to finance costly hotel projects, he said, and at the same time allows the units to be managed as hotel rooms when they are not occupied by owners.

"If you look around America right now, and around the world, there are very few pure hotels being built," Barsotti said.

City approval of the proposed hotel project came with restrictions mandating that a minimum of 61 units in the building be maintained as traditional hotel rooms. The remainder could be operated as fractional-ownership units.

The new Four Seasons Residence Club completed last year in Jackson Hole, Wyo.—at an estimated cost of $225 million—is entirely composed of fractional-ownership units.

Another factor in the demise of the project, Barsotti said, is the efforts of many resort communities to provide attractive incentives to developers to build hotels.

The city of Saint-Moritz, Switzerland, he said, lured away a potential European partner with an offer to finance a two-level underground parking garage for a proposed hotel there.

However, Barsotti this week said he is not blaming the city for the apparent failure of the project, which gained city approval only after being scrutinized in at least 15 public meetings that spanned more than a year.

Barsotti estimated that he has spent approximately $600,000 developing the project but admitted that the process was "a great learning experience."

Barsotti noted that he will likely ask approximately $7 million for the parcel at 151 Main St.

The controversial project was first proposed in 2002, when Barsotti disclosed plans for a 59-foot-high, 81-room structure. The Ketchum Planning and Zoning Commission approved the project but the City Council in January 2003 sent it back to the P&Z, largely because its proposed height required a waiver from the city’s 40-foot height maximum in the commercial core.

Barsotti promptly redesigned the hotel to reduce its height to 47 feet. The P&Z approved the new design and height waiver before the City Council issued final approval in September 2003.

The revised three-story, 84,000-square-foot development, which would cover an entire city block, is designed to include a 3,800 square-foot conference room, an underground parking garage and a fitness center.

Barsotti, with a handful of city officials supporting him, argued repeatedly that Ketchum needed a luxury hotel to draw business from groups and conferences into the downtown core.

Harold Moniz, Ketchum planning director, on Tuesday said he believes the city needs to continue to make efforts to encourage hotel development in the city center.

"Obviously I’m disappointed," Moniz said. "I’ve thought this was a good project all along."

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