A photo caption misspelled the last name of Betty Melton.
He Beat Marriott. Now Can He Revive a Resort Town?
Saturday, May 16, 2009
WHITE SULPHUR SPRINGS, W.Va. -- The Greenbrier resort's new owner -- the man who outmaneuvered the mighty Marriott International -- is a coal baron who just sold some mines to the Russians for $436 million. He is enormous and boisterous, standing 6-foot-7 and weighing enough that he calls himself a "fat hog." He is the president of the local youth baseball league and coach of the girls' high school basketball team and is driven around town by his buddy Moe.
"These people haven't seen anything quite like me," James C. Justice II said the other day, over a sandwich and fries at the resort.
And neither has Marriott, which last night agreed to a settlement with Justice to avoid a battle in federal bankruptcy court in Richmond, where the two sides were scheduled to wrangle for control of the historic resort -- the place where Joseph and Rose Kennedy honeymooned and 26 presidents have visited. (Prince Rainier and Princess Grace stopped by, too.)
With Justice winning control, some residents said, he will forever be seen as a savior to this quiet town in the mountains whose fortunes have fallen alongside the resort. The Greenbrier has endured hundreds of layoffs and brutal labor negotiations amid a steep drop-off in guest visits. The prospect that a local man, not some corporate muckety-muck, could be signing their paychecks had even led residents to pack churches and praise Justice.
"I believe the Good Lord sent him for us," said Greg Scott, a preacher and doorman at the hotel for more than a dozen years who has seen 14 of his neighbors laid off. "We had no hopes, no plans. It was a glorious day when he arrived."
That was less than two weeks ago, after Justice surprised the town and executives at Bethesda-based Marriott International by announcing that he had bought the resort for $20 million. In March, the hotel's previous owner, the railway company CSX, placed the property in Chapter 11 bankruptcy reorganization, telling a judge that it was "unable and unwilling to continue funding" losses.
As part of the bankruptcy, CSX made a deal to sell the resort to Marriott for $60 million to $130 million, depending on the resort's future financial performance. CSX also agreed to give Marriott $50 million to run the hotel. The deal was contingent on CSX winning an agreement with the resort's unions that was also agreeable to Marriott. An accord was reached, and everything was looking spiffy for the world's largest hotel chain.
But Justice, who owns coal mines and large farming operations in several nearby states, was lurking. He went to CSX in April, offering to buy the stock in the entity that owned the resort, assume the debt and move to have the bankruptcy case dismissed -- an unusual step, according to bankruptcy experts, who said buyers usually prefer to acquire assets out of bankruptcy free of debt. Why would Justice go through all the trouble to take on a business he knows nothing about and take on more than $100 million in bills?
He said it had nothing to with the state recently approving casino gambling at the resort: "That's just bull snot," Justice said.
"I don't want to damage these people anymore. I live here. I don't want to dash their hopes," he said. "I am honestly stone-cold confident that I can bring to the table a lot of good stuff. I won't be the guy who thinks with the standard hotel mentality. This place can't be run that way."
Marriott officials met with Justice in Lewisburg, W.Va., yesterday to strike a deal. Under their settlement, both sides have 30 days to come to an agreement allowing Marriott to market the property and receive a fee for any guests it generates for the resort. If an agreement is not reached, Justice will pay a $7.5 million breakup fee, Justice said.
"We have amicably resolved any dispute with Mr. Justice, and we will not oppose the motion to dismiss the bankruptcy," Marriott said in a statement.
No matter what the outcome of the talks, Justice has won total control of the Greenbrier.
"I needed the control," Justice said in an interview. "I'd be letting these people down without it."
Justice won over the community by hiring back furloughed workers and reopening the union contract to increase health insurance and other benefits, including allowing employees to eat one meal a day at the resort.
Last week, West Virginia Gov. Joe Manchin III (D) and Sen. John D. Rockefeller IV threw their support behind Justice, saying he's the right person to run the national historic landmark. A four-hour drive from Washington, Greenbrier features 721 rooms, 10 lobbies, three golf courses, a large medical clinic for executive checkups and a once-secret bunker for Congress to convene in the event of a nuclear attack.
"I would hope Marriott sees we have someone here with the passion, the wherewithal and the resources to own the Greenbrier," Manchin said in an interview. Rockefeller sent Justice a handwritten note saying: "I can't tell how proud I am of you and how happy I am for West Virginia. Without a doubt you have absolutely saved the Greenbrier."
White Sulphur Springs, like many small towns, harbors resentment toward corporate America, which has brought Wal-Marts and other big-box stores to town and -- in the view of some residents -- sucked local businesses dry. On Main Street, barber Mike Lane can look through the shop's window and see that all of the stores across the street are for rent.
"Are they going to crumble, or are there going to be some businesses there?" Lane said. "I'd like to see more businesses. I'd like to cut more hair." He said he thinks someone with ties to the town has a more vested interest in the resort. "I want him to do well," he said.
Peter Bostic, the union's business manager, agreed with Lane. "He will hold the place closer to the chest than an international company," Bostic said.
Justice said his immediate goals include beginning work on a casino, but more important, he wants to win back the resort's Mobil five-star rating, which it lost in 1999. The key to earning that fifth star, he said, was improving his employees' outlook. His theory is that if his employees are happy, they will make the guests happy. If that sounds familiar, it's what J.W. Marriott Jr. has preached for decades.
"I think it's all driven by state of mind," Justice said. "These people here are great. But how great can you be when you are worried if your family is going to be supported? These people have been through a really tough go of it and so we are in the process of lifting the cloud and bringing the sun back out."