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Claremont Sale News Revealed by Leaders Of Boycott Campaign

Friday February 06, 2004

The Claremont Resort and Spa—the East Bay’s premier resort—is up for sale. 

Word came first from the Oakland-based Hotel Employees and Restaurant Employees (HERE) Local 2850 and confirmation followed from Patricia Peeples, a representative of Claremont owner KSL Resorts. 

Peeples said Thursday that the sale is part of a new financial venture with Kohlberg Kravis Roberts & Co. (KKR), KSL’s main funding partner. KSL properties in Arizona, Florida, Georgia and Hawaii are also up for sale and two other California KSL properties have already been bought by KKR.  

According to KSL, the sales are part of expansion program that they hope will free them up to expand their property investments. The sales are also forced by KKR’s need to pay off investors. 

KKR’s website reported that $536 million of KSL’s initial start-up funding back in 1993 came from KKR. According to the union, KKR is funded primarily by public pension funds, several of which are liquidating those accounts, forcing KSL to sell property to repay investors. 

If the Claremont and other KSL properties are sold, union representatives said, KSL hopes to retain some equity by continuing to run the resort’s operations—though there could also be a full sale. Similar business models with operations and ownership split are now employed by several other successful hotel chains, including Hilton. 

“KSL is one of few companies to own 100 percent of its capital. What will happen now is KSL will have more capital for more acquisitions and reinvestment,” Peeples told the Desert Sun newspaper in Palm Springs, where the firm is also selling property. Peeples refused to discuss the Claremont sale with the Daily Planet. 

Meanwhile, officials from Local 2850 said they are excited by the news and hope the result will favor the labor struggle they’ve been waging with the Claremont for almost two years. 

“All the workers would be thrilled to death” if the Claremont was sold, said Leslie Fitzgerald, a Local 2850 organizer. The union and workers hope the labor strife will either force KSL to sign a contract in order to make the sale appealing to potential buyers, or that the dispute can be quickly resolved if the same company buys both operations and the property.  

“They feel like anyone would be better than KSL,” Fitzgerald said. 

Organizers and workers say the union-run boycott is partially responsible for the sale. Anne Appel, who refused to make any direct comment about business to the Daily Planet, told the San Francisco Chronicle last August that the boycott has affected the resort’s group business. In recent months the Claremont lost business from Kaiser Permanente, the HMO giant, and the UC Berkeley football team. 

“I think it’s really good news,” said Fidel Arroyo, a cook at the Claremont and member of Local 2850’s organizing committee. “We’re hoping we can find a new company that will negotiate. We don’t know what’s going to happen, [but we know] we want a just contract.”