NEW YORK--(BUSINESS WIRE)--IBAC Corporation (IBCX.PK), majority owner of The Royal Arkansas Hotel & Suites, announced today that it will cease operations effective immediately. "This is a tremendously sad day for the company, and for our loyal employees who have so well served this property," said Wayne Burmaster, chief operating officer and president of IBAC Corporation.
"Although there are no definitive plans for the Hotels future, the company will review all options to financially liquidate its position in the property. The decision to cease operations was made after company executives visited the property last week and determined that the financial projections for 2007 do not meet the company's required criteria for an ongoing operation."
IBAC Corporation has held a majority ownership position in The Royal Arkansas Hotel & Suites since 2004.
IBAC Corporation is a New York-based holding company operating through its subsidiaries within the Resort, Hotel, Food Service & Restaurant industries. IBAC now has operations in Florida, Tennessee & Arkansas. For more information, please visit: www.ibaccorp.com
By Larry Fugate/OF THE COMMERCIAL STAFF Tuesday, February 6, 2007 10:51 AM CST
The majority owner of The Royal Arkansas Hotel & Suites shut down the hotel’s operations, effective at 12:15 a.m. Monday morning, requiring occupants to vacate the facility.
Mayor Carl Redus Jr. said he called out fire and police personnel because of his concern about the safety of any tenants in the hotel at No. 2 Convention Center Plaza.
Reporters and photographers who were allowed inside found the hotel’s business offices “trashed,” with many filing cabinets empty. The office safe was empty and the door was left open.
The door to one executive office had been kicked open and hard drives removed from office computers.
Officers at the scene indicated they were at a loss to explain the condition of the offices since the hotel had apparently been locked by management personnel.
“Although there are no definitive plans for the hotel’s future, the company will review all options to financially liquidate its position in the property,” according to a statement attributed to Wayne Burmaster, chief operating officer and president of IBAC Corp., the parent company.
“The decision to cease operations was made after company executives visited the property last week and determined that the financial projections for 2007 do not meet the company’s required criteria for an ongoing operation,” Burmaster was quoted as saying.
National Hospitality Management Co., another IBAC Corp. subsidiary, has an exclusive five-year lease with the Pine Bluff Convention Center for all food, beverage and catering and concessions for the facility.
Bob Purvis, executive director of the Pine Bluff Convention Center, venue for the RiverCatz home games, said he was told hotel officials gave one of the team members the keys to the hotel.
“I’m not surprised,” Purvis said when asked if he had anticipated the hotel’s closing.
He said the hotel’s management had not been paying bills in a timely fashion, owed the center for some services and twice had its telephone service shut off for non-payment of bills.
A man who identified himself as a vendor attempted to deliver a $26,000 bill to the hotel Monday.
Purvis said the center’s staff will work with groups that have events planned at the center, noting the University of Arkansas at Pine Bluff’s 20th annual Chancellor’s Benefit for the Arts is scheduled for Saturday.
He said the center may be able to line up cooks and service personnel, or utilize the vendor for UAPB’s food services.
IBAC announced the closing of the 200-room, full-service facility with two restaurants, a lounge and 10,000 square feet of banquet space connected to the Pine Bluff Convention Center, at 1:15 a.m. EST. The New York City-based holding company has held a majority ownership position in the Royal Arkansas since 2004.
Lisa Jackson, general manager of the hotel, did not return repeated calls to her cell phone, Redus said.
Meanwhile, an employee of the Days Inn near Memphis International Airport, another IBAC Corp. subsidiary, acknowledged that Jackson was at the Memphis hotel Monday afternoon, a message left for Jackson by The Commercial was not returned.
The RiverCatz basketball team was forced to look for a new hotel.
“I got the word late last night,” said Ed Corporal, head coach. “We saw them moving stuff out.”
Edward Hayter, chairman and chief executive officer of IBAC, announced in December the company was planning to purchase the Rosswood Country Club here, plus upgrade the Royal Arkansas.
IBAC said it would form a construction and development division to build high-end single family homes, condominiums and time share/vacation villas on the Rosswood property. The company said its initial study indicated that the property could yield as many as 300 to 400 building lots, with unit prices ranging from $250,000 to $500,000.
Fletcher White, Rosswood’s golf pro and interim manager, said the sale to IBAC was never consummated.
“The announcement was premature,” White told The Commercial. “I don’t know where this stands.”
In September, Garry Becker, former president of Royal Arkansas and general manager of the hotel, was charged with eight counts of fraudulent use of a credit card and theft of property.
Becker was removed as president and his employment agreement with the hotel was terminated for cause, Hayter said.
Describing the Royal Arkansas as “a work in progress,” Hayter said the company is planning more renovations and improvements. “We believe in Pine Bluff,” he added.
John Baker, Little Rock attorney who represents the hotel, quoted Hayter as saying “it (the closing) was not supposed to go down like it did.”
The company is asking the hotel’s vendors who are owed money “to hold tight until we get it worked out.”
Monday February 05, 2007 5:46pm Reporter: Michelle Rupp
Pine Bluff - Employees of a Pine Bluff hotel made a shocking discovery Monday morning. When they showed up for work, the business was shut down--with guests still inside.
The Royal Arkansas Hotel and Suites sits next to the Pine Bluff Convention Center. Employees say guests were checking in Sunday, with no idea management was planning to clear out overnight.
In the early morning hours of Monday, members of the Arkansas "Rivercatz" basketball team were seen packing up and leaving the team hotel.
A cash drawer from the restaurant had several thousand dollars removed, and employees say managers ransacked offices, ripped out hard drives, and skipped town after the business closed Sunday night.
(RAH Employee) "All our managers are not here, yes ma'am, I came to work thinking I'm working, but they've closed."
(Karen Turner, Waitress) "Devastated, hurt, shock didn't know which way to go basically my income is based here because my husband and I both work here it leaves us with what to do?"
The hotel is owned by the IBAC Corporation of Brooklyn, New York. Chairman and CEO Edward Hayter said financial problems made it impossible to stay open.
News of the closure means an agreement between the hotel and the convention center to provide catering is now void.
(Bob Purvis, Exec Director, PB Convention Center) "They did the work and provided the labor and food, so we'll take that over and handle it ourselves."
Police say the managers removed furniture from several areas of the hotel. Charges could be filed if it's determined the missing furniture was on loan from local rental companies.
Calls to the hotel's general manager were not returned.
The mortgage holder of Royal Arkansas Hotel & Suites is planning to re-open the hotel Friday, according to Bob Purvis, executive director of the Pine Bluff Convention Center.
By Anita Reding/OF THE COMMERCIAL STAFF Tuesday, February 6, 2007 10:43 PM CST
Purvis said he has been in contact with Zions Bancorporation of Salt Lake City, and has been informed that the bank has hired a hotel management company. Representatives from the company will be in Pine Bluff today, he added.
The hotel, which is connected to the convention center, was closed Monday.
The hotel was purchased by Royal Arkansas Hotel and Suites Inc., in 2004. IBAC Corp., owns 51 percent of the corporation, while International Hotel Management owns 49 percent.
IBAC Corp. issued a brief statement early Monday morning announcing that it had shut down operations at the hotel.
Many of the hotel’s employees learned that the hotel had closed without warning when they arrived for work Monday morning. It’s estimated that about 50 full-time and part-time employees lost their jobs. IBAC Corp announced the closing of the hotel at 1:15 a.m. EST, however IBAC personnel apparently moved items out of the hotel Sunday evening.
Employees Monday morning said a number of offices in the executive wing of the hotel were damaged, with computers dumped on the floors. They explained that they saw three rental trucks back up to the hotel Sunday evening. Workers said some furniture had been removed from the lobby and offices. Reporters and photographers who were allowed inside Monday found the hotel’s business offices “trashed.”
Players with the Arkansas RiverCatz basketball team were among the guests forced to find a new hotel. “I got the word late last night,” Ed Corporal, head coach, said Monday. “We saw them moving stuff out.”
The hotel was locked Monday afternoon after a representative with IBAC faxed authorization, and members of the police and fire departments checked each room, Purvis said.
Several meetings, including a continental breakfast and a luncheon were scheduled at the hotel for Tuesday, and Purvis said the events were held at the convention center. Convention center employees purchased food for the continental breakfast, and a local catering company provided the lunch.
The convention center also received numerous phone calls on Tuesday from concerned residents, and the hotel’s customers and vendors, he added.
The hotel owes the convention center about $5,000 for services dating back to June 2005, according to the convention center’s financial statements. Purvis explained that the hotel is also behind in paying the city’s promotions tax.
And the convention center has not been paid for food services, Purvis said. National Hospitality Management Co., a subsidiary of IBAC Corp., has a lease with the convention center for food services for the facility. The agreement requires IBAC to pay the convention center a portion of the profits, however Purvis said Tuesday that monies have not been received and he is trying to find a company that can take over the contract.
In September, Garry Becker with International Hotel Management was charged with eight counts of fraudulent use of a credit card and theft of property.
He was removed as president of the corporation and as general manager of the hotel, according to Edward Hayter, chairman and chief executive officer of IBAC.
Those charges were dismissed last week, according to Jefferson County Prosecutor Steve Dalrymple.
Becker had been accused of using customer credit cards to pay hotel bills last year, and had been scheduled for trial this month.
“We determined that the alleged amount of money was not as much as we thought and no one ever lost any money so we decided not to go forward with the prosecution,” Dalrymple said Tuesday.
Police said they found the numbers of eight different credit cards that had been fraudulently billed from $1,400 to $1,600 when they searched the hotel office on Aug. 21, 2006.
During an interview with detectives, Becker reportedly admitted using the money to cover payroll and said the hotel was in “financial trouble.”
At a probable cause hearing Aug. 23, deputy prosecutor Rik Ramsey said detectives were able to stop some of the fraudulent transactions.
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