If Dan Gilbert and his partners buy the 206-room hotel, they'll control a luxury property just a short walk from their planned casino. Rock Ohio Caesars and Forest City confirmed the option Thursday but would not comment on the length of their agreement or the potential price.
Rock Ohio Caesars has an option to buy the Ritz-Carlton Cleveland from Forest City Enterprises Inc. The casino developer confirmed the deal Thursday but would not comment on the length of the option or the price for the property.CLEVELAND, Ohio -- The developers of a downtown casino have an option to buy the Ritz-Carlton - a prospect that would give Dan Gilbert and his partners control of a 206-room hotel just a short walk from their gaming hall.
A spokeswoman confirmed Thursday that Rock Ohio Caesars has obtained the right to purchase the Ritz from Forest City Enterprises Inc.
She would not comment on the length of the option or the potential purchase price for the hotel, part of the Tower City Center complex just off Public Square.
"We have an option," said Jennifer Kulczycki, a spokeswoman for the joint venture between Gilbert's Rock Gaming and Caesars Entertainment Corp. "Clearly the proximity is good to the casino, but there's plenty of time to review it and understand whether it makes good business sense to add it to the project."
Rock Ohio Caesars is transforming the Higbee Building into a $350 million casino scheduled to open next year. The former department store is the first part of a larger casino project, and the developers have acquired 16 acres behind Tower City for a larger, second phase.
Gilbert, the majority owner of the Cleveland Cavaliers, promised in 2009 that he would not build a hotel - a move that won him support from the hospitality industry as voters considered a constitutional amendment to allow casino gambling in Ohio.
By buying the Ritz, Rock Ohio Caesars would gain a major asset for the casino's best customers - without violating Gilbert's commitment.
"They can control their inventory for the casino," said David Sangree, president of the Hotel & Leisure Advisors consulting firm in Lakewood. "Casinos will frequently have these clubs where they will provide complimentary accommodations for their high rollers."
Hospitality experts said the Ritz will not satisfy casino-goers' need for rooms, and the developers likely will need deals with other downtown hotels. But Gilbert and his partners would acquire a luxury property, connected to the casino complex through Tower City, for a fraction of the cost of new construction.
The Cuyahoga County Auditor places the market value of the Ritz at more than $27 million; however, a Forest City subsidiary asked the county to reduce that valuation by more than 60 percent for the 2009 tax year, according to the website for the Cuyahoga County Board of Revision. That case is pending, and the Cleveland Metropolitan School District is opposing the reduction.
A Forest City spokesman confirmed that Rock Ohio Caesars has an option on the hotel but would not comment on terms of the deal.
"Cleveland is, from a hospitality perspective, coming out from the bottom of a cycle," said Eric Belfrage, vice president with CB Richard Ellis Hotels in Columbus. "The fact that the casino is a go, and with the medical mart and convention center, there are a couple of dynamics that are going to really revitalize the central business district there."
Forest City has been selling off hotels -- a small part of a real-estate portfolio dominated by offices, mixed-use projects, shopping centers and apartments. In February, the publicly traded company sold the Charleston Marriott in Charleston, W. Va., for $25.5 million.