"Going Once...Going Twice...HOST up for Auction" Topic

Here is the email I got from HMGS this morning:

To the Membership:

The Lancaster Host Resort and Conference Center (the "Host") is going up for auction. The HMGS, Inc. Board of Directors concluded a teleconference Sunday, December 6, 2015, which addressed the upcoming potential sale of the Host, the site of Cold Wars and Fall-In. The discussion centered on our current contractual obligations and the alternatives available to us. While the situation is still developing and very unclear at this point, we would like to provide a brief update to the membership.

What we know:
On December 3, 2015 it was publicly announced that the Host was listed for auction. The auction starts on December 14, 2015 and ends on December 16, 2015. Representatives from the Host informed us of the pending auction on the same day that the public announcement was made. We were informed that they knew of the plans since Thanksgiving, but were not allowed to divulge this information. The bidding will start at $2.7 USD million, but there is an undisclosed minimum sale price which also needs to be met. Several interested parties have already made site visits to the Host, and several more are scheduled this week.

Contract Background
HMGS, Inc. has been at the Host since 1992, almost 24 years, and this is not the first time the Host has experienced a change of ownership. The current convention contracts for Cold Wars 2016, Fall In! 2016, Cold Wars 2017, and Fall In! 2017 were all signed in November 2013. The language in these contracts includes a cancellation liability for both parties on a sliding scale, in which the penalty increases as the convention date approaches. With the exception of Fall In! 2017, all three other conventions are already in the penalty phase if a cancellation is initiated. We just renegotiated the Fall In! 2017 contract, and have until October 2016 to cancel Fall In! 2017 with no penalty.

Options and Alternatives
At this point, the Host has not cancelled Cold Wars 2016. HMGS, Inc. also cannot initiate a cancellation of the convention without incurring a substantial monetary penalty, something which this Board will not consider. While we hope for the best, we have planned for the worst. The Board has already been actively looking for viable alternative sites to the Host. In fact, some of these locations have already submitted proposals on future dates for us to consider. We will not know or have any clearer information until December 16th. Until that time, we will be calling each of the alternative sites on our short list to find out if they have any available convention dates in March or April 2016. Once we know the results of the auction, we will also need to re-evaluate the status of our contracts if indeed there is a new owner of the Host.

Our Goal
Our goal is to run an outstanding Cold Wars 2016 convention, whether it is at the Host, or another location. We have been thrown a curve ball, and time is short, but we have every intention, and will make every effort to make this happen. In effect, this is one of the main purposes for our cash reserves. However, in the event that the convention cannot be held due to circumstances beyond our control, it should be made clear that any pre-registrations or pre-payments to HMGS, Inc. by attendees as well as vendors will be reimbursed. We will have another update to the membership as soon as any new relevant information is received.

Respectfully,

John Spiess
HMGS, Inc. Director of Communications

The language in these contracts includes a cancellation liability for both parties on a sliding scale, in which the penalty increases as the convention date approaches.

If the new owners of the Host just say "screw em" and shut the place down I sure hope that HMGS is getting a substantial amount of money. At this point I imagine it would be extremely difficult to find a new venue for Cold Wars since its just 3 months away.

John, thank for that excellent update on the HMGS conventions status concerning the Host's possible sale. Thank you also, and the other board members, for all the work you take on for the HMGS organization. I am sure we all appreciate it very much.

John, i received your email today as well. Thanks for the factual and informative response. Thanks to all on the BOD.

Ditto

With apologies to the Lady of the Canyon:

They sold Paradise;
Lampeter; and parking lot
A blink no hotel; tennis barn,
or sweet gaming spot

Don't it always seem to go
That you don't know what you've got
Till it's gone
They sold paradise;
Lampeter; and parking lot

They're gonna take all the geeks
Put 'em where folks can see em *
Gonna charge twice the money
Winnow out the chaff of Hmgs

Don't it always seem to go
That you don't know what you've got
Till it's gone
They sold Paradise;
Lampeter; and parking lot

Hey Gamer Gamer
The Host took a CRIT Hit now
Give me pig in the hall way
But leave me my cooler and friends
Then!

Don't it always seem to go
That you don't know what you've got
Till it's gone
They sold Paradise;
Lampeter; and parking lot

Late last night
I primed another ten
But without Lancaster
Where now my wee men?

Don't it always seem to go
That you don't know what you've got
Till it's gone
They sold Paradise;
Lampeter; and parking lot

Well like I said in the other thread on this (there are actually three threads; why start so many threads on the same topic………….); anyway, what leads people to automatically assume that because the Host MAY be sold, the new owners are going to cancel the convention and bulldoze the place?

If anyone has any inside information on this, please share it with the rest of the class; otherwise, assuming the convention will be toast is a bit of a reach/overreaction IMO…………..

Because to compete you need to bring the rooms up to what modern traveler expect and it would be too costly to renovate.

Double G, good question. Please read this article on the condition of the Host and you will get an idea of what the new property owner will be up against. This is just tip of the iceberg of course….
link

You might have to answer a short survey before it lets you read the above article.

The plain fact is you don't know… It's all speculation. The plans will unfold in due course. All we can do is plan for for the future and make contingencies.

Of course some will need to speculate. Some will guess right and others wrongly. None of it matters.

Just let the BOD do their job.

TRU

Wiz,
That article is from September. These issues had been addressed prior to Fall-in. Nothing new.

TRU

Hey, I just got a brilliant plan--I'll make little electricity-generating turbines that fit inside teacups, then spark a heated speculative debate in TMP. With all the micro-tempests that'd generate, I'll be filthy rich! Or electrocuted….

If I can direct your attention away from the giant elephant in the room, the PEL Deadline for events is December 18th.

With the wide range of possibilities in this situation how many have submitted their games, not knowing if, when, or where the convention might take place?

Or everything will be just peachy. Your guess is as good as mine until sometime after the 16th.

They should sign a multiyear contract, maybe move Historicon back to the Host.

It looks like occupancy is down at the Host, it could be a good opportunity to have all three conventions back at the Host again.

I think if they ask, HMGS will find that it can sign a multiyear contract with the Host, maybe going out five or ten years; and even have a 'rolling renewal' clause where it is assumed that they will renew the three events at the Host.

With occupancy at only about 35%, I do not see why it would be a problem to not bring Historicon back to the Host.

Louis J. Desy Jr.

Have you missed the whole thread about The Host being auctioned off and possibly demolished? No long term contracts, thank you very much!

Why read when you can just post.

Lou your making very little sense

If he missed the whole thread about The Host being auctioned off and possibly demolished, then just look for the 14 other threads about the very same subject.

John Spiess:

Thank you for your update and consider this a vote of confidence. We support the Board's decision to honor our contractual obligations and are confident that like Washington, there will be an exit plan if it all turns south.

We will attend Cold Wars no matter where it is held.

Cheers, Tumbleweed – The Viking Forge

With occupancy at only about 35%, I do not see why it would be a problem to not bring Historicon back to the Host.

From the most helpful and useful person ever to "sit" on the Board of Directors.

Why not see about bringing Historicon back to the Host?

Numerous people cite to the fact that a big reason attendance is down at Historicon is because the convention is too far south, plus a number of people in the Lancaster area seem to be unable to afford the new location.

Prior to this there was no ability to move Historicon back to the Host because all of the dates were taken, going out a few years.

With occupancy so low, it seems to be an opportunity to move Historicon back to the Host.

While 'something' may be done in the future with the site, they can't do it if there is a signed contract without compensating HMGS. (While the Host could break the contract, they would have to pay a penalty and that could be set high enough so it would be easy to move to an alternate site.)

It would be easy to see what will happen with the new owners; see who wins the auction and then ask them if they are going to keep the Host open or not. If the new owner is going to keep the Host open, then see what the rates would be for moving Historicon back to the Host.

I expect that Historicon would be a lot cheaper back at the Host than where it is now, plus attendance may go back up.

The whole idea of holding conventions is so that as many people as possible can attend, right?

Louis J. Desy Jr.

Two out of the last four years WBC endured catastrophic AC failures during their midsummer con. Unless the current/new owners vow to completely revamp the HVAC system, ask yourself if Historicon would tolerate that ?

It is actually possible that the Host will sell to a group that operates it as a hotel. It's been milked dry by its recent owners, but it is actually possible to fix the place up and run it. There is obviously demand for hotels out there, and a spruced up Host could do a lot of convention and event business.

I remember being bombarded on here about how it was impossible to move Historicon back because the Host had no open dates for it. That was only a couple years ago, and unless it was total BS (which is possible) it suggests that the Host is a very viable enterprise if improvements are made.

Real estate finance is a complex thing. It is not necessarily easy (or possible, depending on the specifics) to finance a serious rehab. It is MUCH more difficult than just financing a purchase. So, now that the property has become so run down, I suspect the only buyers would be those ready and able to do some repairs (or to repurpose the site).

It wouldn't shock me to see someone keep the hotel but sell off the golf course. That's most of the acreage anyway.

The people that buy hotels don't finance. They bring cash to the table.

The people that buy hotels don't finance. They bring cash to the table

Clearly thats what the last/current ownership did…. give me a break!

114 PA
Thanks

To all others, next Tuesday morning we'll drive down to the Host and see what's happening. And continue to do so….

There will be a Cold Wars!! Good night Mrs. Calabash, where every you land.

thomalley,

That's just not true. There are some REITs that might buy for cash, but there's a robust debt market for hotel mortgages.

Gentlemen
Part of what I do for a living is to evaluate existing structures and make recommendations as to the viability of renovating these structures or demolishing them and building something new in its place. The Host will be demolished. While it is possible to erect another Hotel on the site, I doubt that this will be done. The value of the land and the difficulty in building convention sized Hotels (how much it will cost and how long (in years) it will take to construct the new facility (including all the required permits)) would indicate that the construction of a facility that would be quick and cheap (return on investment being the driving factor) would be the most practical and economic alternative. I think this is the most likely outcome of the sale.

Sniff, sniff; if the Host is sold and demolished, looks like it will be the end of a error……………don't forget the memories; "That's where Doug Redshirt puked his brains out", "There's the chalk outline from where some ballbag went face down after his cavalry charge failed", "There's the huge oil stain from where that masseuse used to oil up shirtless old perverts and give them massages", "That spot in the flea market is where made his first million dollars peddling junk he bought low, sold high and claimed it was from his own collection"………..yup, I'm really going to miss the old girl, but the memories will last forever……………..

49Mountain,

I have to disagree with much of what you say. I've been a real estate developer for 30 years, and I seriously doubt the time to complete construction is a significant factor for any potential purchaser. Value of the finished property is far more of a factor, and a hotel is a high-value use.

There is a lot of relatively new retail space in the area, and I seriously doubt there is enough demand for space to fill a center utilizing a property as large as the Host.

I don't think the Host property is particularly compelling for residential development, at least not houses. An apartment complex is a possibility, but 160 acres holds a lot of apartments, and I'm not sure there is that much demand. Remember that there is plenty of land out there--we're not talking about NY or NJ. Properties a little farther off the main highway are probably more suitable for residential development. And the municipality is likely to prefer commercial to residential, as it is less demanding on services like schools.

That said, any use besides hotel would probably require a zoning change…and the buyer at an auction will have to purchase without contingencies. Which means anyone buying for a use other than one currently allowed would have to gamble outright on whether they will be able to do it…and that is not something developers typically do.

As far as the renovation vs. construction issue, the condition of the Host has been so greatly exaggerated on these threads, people act like it is in 1945 Berlin. The property needs a comprehensive, multi-million dollar renovation, with complete replacement/upgrade of all mechanical systems. It needs a new roof, new windows…lots of expensive stuff. But the basic structure itself seems sound. I've never seen any indication of true structural decay. The foundation seems sound enough. I think a rehab could get the place in decent enough shape in a reasonable amount of time…and at a reasonable cost, assuming someone buys it for a low enough price.

People have a way of assuming that raw land is worth more than it is. Demolishing the Host would be very expensive, probably a seven figure job all by itself. Obtaining the needed zoning changes and demoing the Host, then building roads and utilities for a residential development would almost certainly take longer than fixing up the hotel. A shopping center might be quicker…assuming the zoning allows that use without change, but not meaningfully so.

The continued construction of hotels all around the area suggests the base demand is there, even for places without the Host's convention space. There is a new facility now going up where Lapps was (and then the Japanese place). It seems an odd take for people to suggest that hotel isn't a good use for the Host when there are hotels being built all around.

However, if the Host is sold and renovated, that may still be a problem for future events. Almost certainly, the facility would be closed while work was going on…or at least large sections would be shut down. Considering the intensity of the Host whining that takes place, it is hard to imagine HMGS moving and then coming back, even to a substantially improved facility.

Civil:

Thank you for a very thoughtful post. You make some good points.

Here's an anecdotal story….
In 1988 I was involved as an architect in the remodeling of a major airport hotel near JFK in NY.
Our client was Marriott and they had asked us to upgrade the hotel, which was extremely successful with a greater than 100% occupancy rate [meaning more than one occupancy per calendar day – mainly flight crews], for the Sheraton hotel group. The building was particularly shabby and looked very tired, which meant the scope included an upgrade in finishes and quality, new fixtures, fittings and replacement of the mechanical systems were in order.
As we completed a years work on the project, Sheraton unexpectedly dropped out of the deal.
Marriott scrambled for a replacement and eventually we all met with the potential new management team – Howard Johnson's.
We presented our work, and then the HoJo team politely said…. 'very nice, but we built this building as a HoJo's twenty years ago – we don't see much wrong with it that a coat of paint wouldn't fix'.

That was the end of our involvement – and it's not a HoJo's currently.

So, it's possible that a new owner, in the hospitality market, could consider that the Host is okay – but the chances of that are slim to none, in my opinion. Let's face it that was the approach the current [soon to be ex] owners of the Host had to the place, and that didn't work out too well.

If I were to speculate, I'd say a new Hotel group will partner with Tanger to purchase the property. A parcel to the west of the tennis barn will go to Tanger for potential expansion of their site. The current buildings will be demolished, and ultimately be replaced with a smaller hotel, and possibly conference/convention facilities [the site is still prime for that use]. The golf course, which is a great hospitality feature, may be kept either as a slightly altered 18 hole course or reduced to a more manageable 9 hole course.

Demo and new construction would be cheaper for a new developer. They will demo and recycle what they can and rebuild. I would auction off pieces of the Host to the gaming community,Rotundo would love a stall from his favorite lobby bathroom and I know Double G would pay up for a piece of the sticky carpet in the vendor hall….

I got the email from the BOD too. Have to second Mr. Spiess for a very intelligent summary of our position and options. Well done and nicely communicated.

Walt

Don't worry Miller cop. I am going to rip a toliet out like the Chief ripped out the sink in "One flew over the cuckoo's nest". It'll be like when they tear iconic stadiums down except we will take down staple filled tables and chairs and thirty year old plastic plants. Sell them at the new venue's flea market. We'll be rich….smelly but rich.

Walt,

I'll "third" Mr. Spiess for his excellent communication on this and other issues.

Scott

I seriously doubt demo and new construction would be cheaper. You have to remember the Host's place in the market isn't competing with the Ritz Carlton. The property needs a lot of work, no question, but it can be brought back to a satisfactory level for far less than demolishing and rebuilding. Just the demo costs alone would be extraordinary.

I do think it is possible a new owner would peel off some or all of the golf course and sell it off.

Having conventions at the Host

It would seem that since there are already two conventions running at the Host each year (Cold Wars and Fall In) that the current site should be ok for running Historicon also.

Cold Wars and Fall In are under contract out to 2017. If those two conventions run at the Host, then it should be possible to move Historicon back to the Host at some point.

Even with the problem with the violations earlier this year, Fall In 2015 was run after that.

Louis J. Desy Jr.

@Louis
The Host will be on the market in an online auction starting next Monday and ending Wednesday.
The current management are ditching the property.
There are no guarantees the building will survive this pending sale.
As a result HMGS cannot consider current contractual obligations between themselves and the Host as viable – let alone consider future contracts.

Louis…join the real world

The Host is already being used for conventions

The point I was trying to maket is that people seem to act as though the current site, Host, can't be used for conventions. But, it was already used for two conventions this year and is contracted for an additional four conventions in the future (2016 and 2017).

After the auction is done next week, and it is confirmed that the site is not going to be torn down, it would be possible to see about moving Historicon back to the Host at some point.

With the listing showing an occupancy rate of only around 35%, there should be openings in one of the future years sometime in the Summer that would work.

Louis J. Desy Jr.

The 35% figure relates to room occupancy – in the industry anything below 70% is typically bad…… it means the revenue is sub par, and is struggling or simply can't support itself.
The 35% does not necessarily also equate to the number of conventions or conferences. They could have a conference that runs for a day with no associated rooms being occupied. Not every conference/convention is necessarily a multi-day event, requiring overnight stays.
As the hotel is it's core business they ultimately have to fill the rooms to keep the doors open.

Louis, get a clue. The Host is going to change, one way of the other. There is a very high probability that there will be NO Host for a convention to held at. And, if I've got this right, with the change of ownership, our contracts for the out years are not going to be binding on the new owners.

49Mountain, CD and Ligniere all raise important points. Whatever happens to the Host depends on what the yet unknown buyer has in mind (assuming the property actually sells. There is also the possibility that the unknown reserve amount won't be met and property remains with the current owner). There's a multitude of possibilities and how any them impact the cons is anyone's guess.

But one thing we do know: Things are going to change come 1:00 (EST) 16 Dec…

I like it, nobody wants to stay there so we can get in cheap. Like the old joke about bad food and small portions.

Would the contracts for future years be binding?

IF the sale/auction of the host was due to a foreclosure or bankruptcy situation, then the new owner would have the option to NOT assume the contracts.

I looked and do not see any court case, foreclosure or bankruptcy filings as the reason for the auction, so anything that the current location is obligated to do now, like the contracts for events, will carry with to the new owners.

I expect that anyone putting in a bid will take time and find out what they are obligated to provide if they buy the Host, or what the penalties would be for breaking the contracts.

If a potential bidder is planning on tearing down the Host and putting something else there, then I expect they would look to see what the penalties would be or how long they had to wait before the could tear the Host down.

If a potential bidder is going to continue with the Host, then I expect they would be looking at repairs and getting the occupancy back up to a reasonable level.

I would also expect that if the Host was in one of the situations where the contracts could be broken or not assumed by the next owner, that they would have notified everyone as to the possibility so the penalty would be as low as possible.

Louis J. Desy Jr.

From our experience (HMGS South) we found out that when a property is sold any contracts are NOT necessarily binding on the new owners. The new owners may choose to assume the contracts as part of a sale, may volunteer to honor contracts (as a goodwill gesture or to promote future business) but are under no obligation unless it is stated as a term of the sale. Further cancellation penalties may not necessarily apply especially if the selling group disbands after distribution of proceeds. I imagine most of the particulars are governed by laws in the particular State where the sale takes place.

The hotel we used when our two conventions were in Tampa was sold. The new group decided NOT to honor our contract and further, according to legal counsel, no penalties could be collected from either the selling group or the group buying the property. We moved to Orlando and once again the hotel was sold. But this time the new group was eager for our business and honored our existing contracts as well as renewing them several times over the years.

I would be very careful of any advice here unless the person offering it were an experienced Civil attorney and a member of the Pennsylvania BAR.

Contracts and being binding on the new owners

I would be interested in more details of that situation.

1: Was the sale a voluntary sale, standard real estate listing, or was it a force sale, like a bankruptcy?

2: What was the property?

3: Did the contract specifically have a clause stating that it would not be binding in the event of a sale?

Contracts usually do survive and transfer with the sale of an asset, like real estate. If they didn't, then the only thing anyone would have to do to get out of contracts they did not want to honor would be to sell to someone else, and then buy it back.

Simple examples of a business being bound to honor previous contracts, unless something unusual happens, are here:

link

link

link

Louis J. Desy Jr.

Please, just let it go.

If the new owner demolishes the property, do you expect them to honor the contract and have us all sitting in a parking lot selling and gaming?

Again, just let it go.

Interesting.
I have always said that my go-to place for FREE legal, medical, IP and relationship advice is TMP.
What can possibly go wrong?

As one of my lawyer wargaming buddies told me, the only sure thing in cases like this is that lawyers get paid first.