The parent company of Whistler Blackcomb was trying to unsuccessfully refinance its $1.7 billion debt but Fortress Investment Group could not make its final and extended payment. Its lenders started foreclosure proceedings and now the resort is to be sold at auction Feb. 19, a week after the start of the games. Intrawest, a division of Fortress, runs and operates the resort.
It's not the only financial problem left by Fortress at the Olympics. The City of Vancouver had to take over financing for the 1,100-unit athletes' village after the investment group stopped payments on construction in 2008.
A spokesman for Intrawest said its parent company was still in negotiations with its lenders and the banks timing the auction in the middle of the Olympics was on purpose. "This is a negotiating tactic," he told the The Times. "As far as we are concerned, it is business as usual at all of our resorts." He said that the financial matter will not affect the Olympics.
I'm not sure how much negotiation for Intrawest is possible. Perhaps its lenders are trying to embarrass the company into settling quickly and easily, but they have defaulted on their loans -- something both sides understood was a possibility for at least a year. If anything, the whole situation reminds us of the state of the hospitality industry, especially the luxury segment, and how the recession has revealed the regularity in which companies wallowed in debt. (Intrawest also runs Winter Park and Steamboat in Colorado and Mont Tremblant in QuÃ©bec.)
While the situation was probably common in previous eras, the recent credit boom and bust showed us how precarious everyone's financial position really was and how easy it was to be overextended and encumbered with debt. Perhaps that easy credit made it comfortable for companies to rack up debt without question, and executives seemed as if they counted on that same credit being available a year or two later. It wasn't and here we are, ready to watch the Olympics at a luxury resort in foreclosure.
Photo courtesy of Whistler Blackcomb