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SAN ANTONIO-Gaylord Entertainment Co.’s termination of its $252-million agreement to acquire the 508-room Westin La Cantera Resort came as little surprise to the industry, given the current availability of capital. One hotel expert also suggests that second thoughts about the property’s location may have also led to cold feet on the buyer’s part.

As part of the termination agreement, Nashville-based Gaylord Entertainment is incurring a one-time charge of $12 million. In November 2007, Gaylord had entered into an agreement to acquire the resort at 16641 La Cantera Pkwy. and an adjacent 90 acres from USAA/La Cantera Development Co. of San Antonio and Starwood Hotels & Resorts Worldwide Inc. of White Plains, NY.

“Gaylord currently has properties pretty well spread out and that’s how they’ve operated,” says John M. Keeling, senior vice president for PKF Consulting in Houston. He adds that the Gaylord Texan & Conference Center in the Dallas/Fort Worth metroplex might have influenced the decision. “They might have had second thoughts about having two properties that close together in Texas,” he speculates.

Keeling acknowledges Gaylord Entertainment is paying a stiff termination fee, but the $12 million pales in comparison to what it would have paid to own and upgrade the Hill Country Resort. Keeling points out that, in addition to doing upgrades on the property, more rooms were planned.

In its statement about the termination, the economy was cited as the impetus for the decision. “Over the past several months, we held fruitful discussions with a variety of potential partners. However, in the current capital markets and economic environment, we determined that it is not in the best interest of our shareholders to focus our resources and capital on this project at this time,” Colin V. Reed, Gaylord’s chairman and CEO, says in the press release. Calls to Gaylord Entertainment were not returned by press time.

Keeling says financing troubles could definitely have been one of the factors behind the termination. “The cost and availability of capital has been severely impacted by the subprime situation,” he stresses to GlobeSt.com. “There’s still a lot of equity available, but what’s not available is debt.”

Keeling cautions, however, that things aren’t as dire as portrayed. “Financing is tight. We’re in a recession. But, the economy is far from being in the tank,” he adds. “We’re not seeing any evidence of slowdown based on our own business volume.”

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