"It isn't such a unique situation to have two partners squabbling," said John Norlander, president of Radisson Hotel Corp. which is based in Minnesota. "We had disagreement on how to run the partnership; we still have disagreement on how to run that partnership, that's why we've said we need to dissolve it."
Radisson's disagreements with Americom blew up into an ugly fight in June, when the hotel barred Paul Tatum, president of Americom, from the building, and the two sides exchanged a barrage of public invective. Radisson and Americom are the U.S. partners in the hotel along with the Moscow City Property Committee.
Last spring, Radisson filed a law suit in a Minnesota federal court to dissolve the partnership, and during a visit to Moscow on Thursday Norlander said he was "totally confident" of winning.
"It took me three years to get to the point where I was to be confident enough to think that," he said.
Tatum said he is seeking a compromise with Radisson to prevent the joint venture from losing its lease on the prime riverfront property.
"Radisson has decided that they are not willing to do business with Americom in any respect, that there have been too many bridges burned," he said. "We're going to fight them saying they have been the ones initiating the anti-partnership activity."
If Radisson insists on the immediate dissolution of the partnership, Tatum said he will seek $100 million in compensation for income lost on the next 17 years of their 20-year agreement.
Despite the partnership problems, Norlander called the Slavjanska "a great business" with an unusually high rate of profit. For the first half of 1994, for example, the hotel generated $16.5 million in sales and earned $8.5 million in operating profit, which did not include a $6 million rent, he said.
Such numbers give the 430-room waterfront hotel a 50 percent operating profit margin, about double that of a typical Radisson hotel elsewhere in the world.
High occupancy levels and lower labor costs help account for the financial success, Norlander said.
The squabbling between the partners has received considerable attention because the Slavjanskaya has become a hub of foreign business life in Moscow and the home to many visiting American VIPs, including President Bill Clinton in January.
One of the disagreements is over how much of the hotel's money should be reinvested into the hotel, which opened in 1991.
Norlander said that a total of $30 million was needed to give the hotel a facelift, of which about $20 million has been spent.
Yet to invest these funds, the hotel has fallen behind on its rent, and has paid only $23 million on $33 million owed, Norlander said.
According to the latest issue of the newspaper Tax Police, published by Russia's Tax Police Department, the hotel is also facing a $917,264 fine for tax irregularities.
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