(Bloomberg) -- Allegiant Travel Co. has hired a firm to improve the financial performance of its Sunseeker resort and help find “strategic alternatives” for the money-losing Florida property.
Prospect Hotel Advisors LLC, an adviser to Blackstone Inc. and other private equity and real estate funds, will work with the hotel’s existing management team to bolster its fortunes, Allegiant said Wednesday.
“Clearly Sunseeker Resorts’ financial results are not meeting expectations,” Greg Anderson, Allegiant’s president and incoming chief executive officer, told analysts on an earnings conference call. “As we go through our strategic review, I want to say that all options are on the table,” he said, including selling a stake or the entire project.
Allegiant’s decision to build the hotel in Port Charlotte, Florida, has been questioned by key stakeholders, including shareholders and its own pilots, who see it as a costly departure from the company’s core airline business. The resort has been plagued by construction delays and heavy damage it sustained during Hurricane Ian.
Former CEO John Redmond, who had spearheaded the 785-guest room hotel, stepped down in September — three months before Sunseeker’s grand opening.
“We’re not interested in continuing to lose money. We didn’t build it for that,” Micah Richins, Sunseeker Resorts’ president, said on the call. He added that he expects to see “remarkable improvement” in the hotel’s operations next year.
The under-performance of the resort has become a drag on earnings at Allegiant, which scrapped its dividend earlier this month. Sunseeker’s revenue totaled $16.8 million in the second quarter with an average occupancy rate of just 35%. Allegiant forecast a pretax loss in 2024 of $25 million on Sunseeker, wider than the $15 million deficit projected in May. The expected full-year occupancy rate dropped to 40%, down from 45% previously.
Separately, Allegiant reported a second-quarter profit excluding special charges of $1.77 a share after the close of regular trading on Wednesday, while analysts had expected 76 cents.
Shares of the company were little changed in aftermarket trading at $56 as of 5:41 p.m. in New York. The stock closed Wednesday down about 32% this year.
(Updates from third paragraph with executive comments.)
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