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Last Resort

by: RiShawn Biddle
Forbes Magazine
September 3, 2001

 Former Pritzker family partner Alvin Dworman has more than a busted thrift to worry about. By now most folks know Alvin Dworman as the star-crossed partner of Chicago's billionaire Pritzker family in the insolvent Superior Bank, one of the nation's largest thrift failures in recent years. But in ritzy Santa Barbara, Calif., he's better known for his bulldog tenacity in building the Bacara Resort & Spa, a 360-room, 225-fireplace, $220 million development where rooms go for as much as $5,000 a night. After taking over the land as part of the acquisition of a real estate firm, Dworman, 75, spent 18 years battling environmentalists, politicians and locals to build the resort. It finally opened last September.

  But Dworman is having about as much luck with Bacara as he's having in the thrift business. By some industry estimates Dworman is losing $2 million a month on the property, which he financed in part with $135 million in loans from CIBC World Markets and Salomon Smith Barney. Despite such recent celebrity guests as Michael Jordan, the resort is on average 56% filled. It needs 75% occupancy to be profitable.

  "I wondered where the money went," shrugs Alan Reay, president of Costa Mesa, Calif. hotel broker Atlas Hospitality Group, after a visit.

  The location doesn't help. Despite Dworman's gushy marketing materials, Bacara isn't actually in Santa Barbara, but in the adjacent town of Goleta. Its next-door neighbor is a belching natural gas processing plant visible from Bacara's beach.

  During construction Dworman had to spend an additional $10 million after Chumash Indian artifacts were discovered on the site. He built an extra-steep ramp to avoid disturbing a grave, then bought special room-service trays that wouldn't slosh food on the ramp.

  Dworman can't even relax on the nearby public Sandpiper Golf Course, where guests who've had their fill of "oatmeal sage body polishes" and "Bindi herbal balances" can retreat for a round on the links. Dworman sued the course in January, complaining that he'd lost $5 million in additional sales, "10,000 new room nights per year" and "substantial monies" he spent on a clubhouse because the course wasn't improved to "world-class status." With the case pending in court, Dworman complains that the property still hasn't been upgraded to his standards.

  At least he doesn't have the Pritzkers complaining about this deal: They pulled their money out long ago.