June 3, 2009 - Mandarin Oriental Victory Park, Dallas TX

Mandarin Oriental Backing Out On Victory Park Project

"We just walked away from our Dallas project," Richard Baker, Mandarin Oriental executive vice president, said during a panel discussion at a New York University hotel-industry conference in Manhattan on Monday. "That city has been overdeveloped in luxury, both hotel and residential."

There will be one less luxury hotel in Dallas's glutted high-end hotel market. Mandarin Oriental Hotel Group is scrapping its plans for a luxury development in the city's Victory Park project.

"We just walked away from our Dallas project," Richard Baker, Mandarin Oriental executive vice president, said during a panel discussion at a New York University hotel-industry conference in Manhattan on Monday. "That city has been overdeveloped in luxury, both hotel and residential."

To be sure, the Victory Park project, a collection of offices, hotel towers and condominiums near Dallas's American Airlines Center sports arena, has many of its own problems. After developer Hillwood Development Co.'s initial strategy of positioning the project as a luxury destination failed, Hillwood, which is led by H. Ross Perot Jr., now is turning over its equity in the project to its partner, German lender U.S. Treuhand. The two had invested roughly $275 million in the project together. Hillwood intends to continue managing Victory Park.

Developers have added 579 luxury hotel rooms in Dallas since 2006, amounting to a 42% growth rate, according to Lodging Econometrics. Among the new arrivals are a W hotel in Victory Park and two Ritz-Carlton Hotel Co. towers. The Mandarin at Victory Park was to include 120 rooms and 90 residences. A Hillwood representative declined to comment.

Original Story - Wall Street Journal