Want to see a very serious, very wealthy Japanese sports tycoon break out in a very big smile?
Ask him how much money he saved on his $250-million purchase of the luxury La Costa Resort Hotel and Spa because of the rise of the yen and fall of the dollar during the escrow period.
"I saved $45 million," a smiling, laughing and altogether pleased Toshio Kinoshita, president of Osaka-based Sports Shinko Co., told reporters at a press conference Friday to announce the completion of the sale.
With that, Kinoshita helped explain why the Japanese are investing so heavily in the United States, why Sports Shinko is hunting for more U.S. golf resorts to buy, and why La Costa, with a reputation as one of the nation's top-dollar resorts, was such a good deal.
Claim as Top Resort
La Costa officials are loathe to release dollar figures to back up the claim, but they assert that La Costa is the top resort in the country in terms of average spending per guest.
La Costa has thrived with rates from $185 to $1,200 a night, two golf courses, 23 tennis courts, a list of Hearst Castle-like delights such as seven restaurants, a movie theater, and Roman baths, and a full menu of massages and rubdowns. Unlike its competitors in Palm Springs and Florida, it does not have to offer off-season discounts because of heat or rain.
"La Costa is unequaled in the quality and scope of its facilities," said Kinoshita.
Sports Shinko Co. owns 27 golf courses in Japan, two in Hawaii and three in Florida. Kinoshita declined to say what other resorts he is considering for purchase, although he said none is in San Diego or Los Angeles counties.
San Diego-Based Manager
Along with announcing the purchase from principal owners Allard Roen, Irwin Molasky, and Merv Adelson, Sports Shinko Co. said that La Costa will be managed by San Diego-based Global Hospitality Corp., whose board chairman is Howard P. "Bud" James, former head of Sheraton Corp.
James' son, Paul, will be the resort's managing director. He spent 11 years with Sheraton, including as manager of the Sheraton Skyline Hotel at London Airport.
Sports Shinko's initial orders to Global concerning the 22-year-old resort were simple: make it profitable.
During a two-year, $100-million renovation and expansion from 227 rooms to 482, occupancy rates plummeted and red ink washed over the resort.
Jerry Morrison, the resort's executive vice president for finance, said the dropoff was anticipated before construction began because of the unavoidable disruption in the relaxing atmosphere. Since renovation was completed in late February, occupancy is climbing back to the pre-construction level of 80%, he said, but he would not give out specific figures.
"When you undergo a renovation as complete as La Costa, you are essentially operating a new hotel," Morrison said.
Global officials said no immediate changes are planned either in price structure or personnel.
But a new marketing strategy will try to reach beyond Southern California, which heretofore has provided more than half of the resort's clientele. A trade mission has already been dispatched to Japan.
"We think the resort is just not tapping enough of the U.S. market--particularly Chicago-New York-Boston, as well as the international market, Canada-Europe-Japan," said newly hired public relations director Simon B. Cardew, another former Sheraton executive.
Exact terms of the purchase were not released but James said they consisted of an assumption of current mortgages, an initial payment, and a further payment in three years.
After a 60-day escrow, the money was transferred at precisely 8 a.m. Friday to the former owners' bank in Las Vegas.
With $250 million (33,750,000,000 yen) at stake, even a moment's delay could change things, given the fluctuation of the dollar and yen on the international scene.
Cost Dropped Daily
Each day of escrow brought down the cost in yen, although it did not necessarily harm the former owners, unless they plan to invest in Japan. They did not attend the press conference, although Adelson, chairman of Lorimar-Telepictures Corp. and husband of journalist Barbara Walters, checked into the resort Thursday night.
Kinoshita said that the La Costa owners had approached Sports Shinko about a purchase, not vice versa as the owners have asserted.
Asked about his windfall due to the yen-dollar seesaw, Kinoshita thought, calculated and started to laugh.