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Tesoro Resorts Cabo San Lucas, Mexico

March 3rd, 2008

Cabo’s Anchor Hotel

Wants To Make Nice

New owners of Tesoro ask us not to judge them by their predecessors but their owners and tenants are too angry to cut them a break

BY CHUCK U. FARLEY

Cabo’s downtown hotel, the hotel formerly known as Plaza No Glorias, then Costa Real, and most recently Tesoro, is whining that they don’t get no respect.

That might be because the hotel has been a revolving door of inept management for years.

But Pamela Streeter, the hotel’s most recent public relations rep, is pleading with us all to reevaluate their behavior.  
“Don’t blame us for anything that went down prior to August 1, 2007,” she keeps telling us.  That’s when the current owner, Steadfast out of Newport Beach, California, went into cahoots with Interstate, a hotel management company, to form IHR de Mexico, the current company Streeter tells us we can hold responsible for the hotel’s policies.

According to their website, The Steadfast Companies, “acquire poorly managed and underperforming hospitality assets with an identifiable upside.  Acquired properties are managed by IHR de Mexico, a joint venture betweenSteadfast Companies and Interstate Hotels and Resorts (NYSE:IHR).  The company currently manages and provides services for hotels in Cabo San Lucas, Ixtapa, and Manzanillo Mexico.”  Well, nobody would argue that this acquisition doesn’t fir the description of underperforming with an identifiable upside.  It remains to be seen, given all the acrimony and personalities involved, if it is a reachable upside.

The hotel was operated while in bankruptcy for at least a half a dozen years, with morale in the ditch, and capital improvements brought to a halt.  By the time Costa Real took it over, the physical plant was in shambles.  Nobody knows where the blueprints of the building are, and when a water or sewer pipe breaks, or there is an electrical failure, workmen just start knocking holes in the walls, looking for the problem.  Of course the walls look like patched up Swiss cheese.

Steadfast has invested heavily in the hotel’s infrastructure, remodeling and updating many of the hotels rooms.  There are three classes of rooms at Tesoro: individual condominiums, timeshare units, and hotel rooms owned bySteadfast.  Most of the ground level retail space is owned by the businesses that occupy them (seldom is commercial property in Mexico leased, it is bought).  The owners must pay a hefty fee for maintaining the premises.  This maintenance fee includes security forces, cleaning staff, and a repair crew.  Almost nobody pays the maintenance fee.

Withholding maintenance fees is a national sport in Mexico, right up there with squatting, and there is some squatting going on at Tesoro, too, where individuals have given up all appearances of making payments.

Some are behind on their fees because they stopped paying to make a point over their unhappiness with the way the maintenance fees are spent, some withheld their fees for a while but got so far behind they can’t catch up, and some are just taking advantage of a confused situation.  One restaurant owner brags that he hasn’t made any payment for more than five years.  Understandably, this cheeses off the management who is not inclined to give the best service when they can’t collect for it.

There are common areas that have been sold or leased or rented and never recorded.  Some parts of the property have multiple claims on them.  About the only thing that unites all these squabbling neighbors is a universal hatred for whatever manager is in charge of them this week.  Many of the previous managers would make side deals, pocket the upfront money, and leave the problems to the next manager.

Each commercial unit facing the water has a front yard of bricks between then and the concrete boardwalk (malecon) that wraps around the marina.  The malecon is owned by Fonatur, a federal government agency.  Ownership of much of this primes real estate that is a no man’s land is up for grabs.  Some is rented, some has 
been bought, and much of it is squatted on. 


One squatter, an American charter boat booker, is betting on eventually getting his patch of squat deeded to him because it’s in his Mexican wife’s name.  Due to Mexico’s arcane system of laws, the case is sure to languish in the courts for at least a dozen years.  Meanwhile he bemoans the need to hire a private guard to insure that his lean-to is not torn down in the middle of the night, as other squatters have experienced.

Security has always been an issue, and hotel management is usually on the unhappy end of that stick, also.  Remember, the malecon the hotel is perched on the edge of is federal property and neither the hotel nor the city has any jurisdiction.  No, of course the federal government isn’t going to send anyone to patrol it.  Tesoro has increased their private security presence on their land, and even that is not making their constituents happy. 

The most recent complaint is against the uniforms which look like army fatigues.  The owners of the tourist oriented businesses believe the uniforms look scary to the foreigners.  “They look like storm troopers” said one merchant.  Asked why Tesoro chose those uniforms, Pam Streeter, the Tesoro public relations woman, said, “We’re still experimenting with what’s going to provide the most effective presence to provide the best security.”

When asked if the new owners were going to honor past agreements, those cast in stone, those made on the fly with previous managers, and those agreements claimed by merchants who have no proof, Streeter said, “I can’t comment on that.”  At another point in the conversation she said, “We are looking into that.” (All the agreements).

After listening to the Tesoro public relations people, and then interviewing the irate owners and tenants of Tesoro, most of whom declined to go on the record or be photographed or even allow their name to be used here, one has to conclude that the hotel is a mess of inherited problems that will take a milagro (miracle) to sort out.  

Streeter just asks for the public not to blame them for what happened before they took over on August 1 of last year.  “We want your readers to know that we are aware that there have been issues, and we’re addressing them.  Over the next year you will see huge changes,” she said.

Some of those changes include a multi story parking structure on their current parking lot, and moving the lobby to a new structure that will be built in the air over the bricked flood control channel on the eastern part of the property.  They will also build a second swimming pool on the upper deck. She promises more new goodies, but says she’s not at liberty to discuss them yet.

Meanwhile, we all enjoy the hustle and bustle of the waterfront, if not all the strolling hustlers.  It’s never dull around Tesoro.  Try dinner at the restaurant inside the hotel, in the lobby.  It’s called the Agave Azul and it is amazingly good.  Top quality fine dining at great prices.  Possibly the best restaurant deal in downtown Cabo.  We’re still in shock over how good it is.

*No infringement intended…

Note:

It's the same story. In the four years that we have been here, no one from the hotel has yet to 
take responsibility.  Each person passes the buck to the new person.  It is a shame that Ms. 
Streeter was unwilling to stand up and take charge.  Instead, she hides her head in the sand just
like her predecessors.

 

 

 

 

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