Eastern Michigan University’s Board of Regents made major changes to the management of Eagle Crest Resort, during its meeting Tuesday in 201 Welch Hall, because under the former management arrangement the university had been losing “maybe $150,000 a year” EMU Chief Financial Officer John Lumm said.
The Eagle Crest Resort’s hotel is owned by Marriott, while its corporate education center and banquet facility are owned by EMU; the land the resort’s golf course sits on is owned by Ypsilanti Township but is under lease to EMU until 2085.
The Board approved a “Management Agreement for the Eagle Crest Corporate Education Center and Banquet Facility,” which will result in the Marriott Hotel managing the facility, which has until now been managed by EMU.
The Board also approved a “Second Amended and Restated Joint Operating Agreement” between EMU and MFS Ypsilanti Holdings, LLC, the company that owns the Marriott Hotel.
Lumm said the new arrangement would bring EMU a $150,000 profit the first year, for a net gain of $300,000.
According to EMU’s press release today, details of the new agreement include:
• During the first year of the agreement, 2012, EMU will receive one percent of the combined gross revenues from the hotel, the corporate education center and the banquet facility.
• During the second and third years, 2013-14, EMU will receive three percent of the combined gross revenues from the hotel, the center and the banquet facility.
• After 2014, EMU will receive two percent of the first $13.5 million in gross revenues, and five percent of anything in excess of that. EMU is to be paid monthly, with an overall reconciliation and adjustment to occur at year’s end.
• EMU will pay for capital expenses at the center and banquet facility, such as needed renovations, while Marriott will assume all day-to-day expenses, including personnel, food and maintenance.
• Marriott will seek to have the Eagle Crest Resort complex listed on the Marriottgolf.com website as one of Marriott’s signature golf properties that offer exceptional golf facilities and accommodations to visitors.
The hotel will offer employment to most regular Eagle Crest Corporate Education Center and Banquet Facility employees. Employment details will be finalized by July 1 start date of the agreement.
When asked whether the new arrangement was the result of a competitive bidding process, or just a decision to modify the existing arrangement, Board Chair Roy Wilbanks said “We own the conference facility and Marriott owns the hotel, so we couldn’t have done anything else without selling our buildings first. It was sole-sourced.”
EMU President Sue Martin told the signing group that the new arrangement was a result of the way “we re-examine everything we do. We now have a financially sustainable situation.”
She called the change an act of “budgetary stewardship that will financially benefit both the manager [Marriott] and the university.”
Jeff Long, general partner for the ownership of the Ann Arbor Marriott Ypsilanti, spoke of the efficiencies and synergies possible as a result of the new arrangement. Marriott will continue to run the hotel and will also assume day-to-day management of the conference facility, and will do sales and marketing for the entire resort.
The university will focus on the operation and administration of Eagle Crest Golf Course, although Long spoke of the advantage of adding the golf course to Marriottgolf.com, which would entail doing sales and marketing for the golf course as well.
Wilbanks responded enthusiastically to the possibilities: “We would be the only Marriottgolf.com course in Michigan; there are only 60 in the world,” he said.
He added the new agreement “aligns the strength of the two entities.”
Brenda Stumbo, Ypsilanti Township supervisor, said she is “thankful that the EMU Board of Regents and the Marrriott Hotel…continue to have a vision for the future of our community.”
Eagle Crest is located on a 160-acre site at 1275 S. Huron in Ypsilanti Township. The hotel overlooks the fairways of the golf course and Ford Lake. It’s a 10-minute drive from Ann Arbor and 20 minutes from Detroit Metro Airport.
Four years ago the City of Ann Arbor canceled a process that would have involved the Valiant Corporation of New York building a hotel and conference center above its new underground parking structure on South Fifth Avenue in downtown Ann Arbor, citing lack of evidence that such a project would be financially viable.