State agency ready to take over Stanley Hotel

ESTES PARK — A state agency late Wednesday cleared the way for completion of a complex deal to buy the privately owned Stanley Hotel, complete a long-languishing film center there, help boost Colorado’s profile as a player in the global entertainment industry and provide funding for the arts in the state’s public middle schools.

The Colorado Educational and Cultural Facilities Authority approved the documents necessary to issue bonds for the Stanley Hotel and Event Center Project. Under the terms of the deal, CECFA set up a subsidiary called SPACE LLC (Stanley Partnership for Art, Culture and Education), which will borrow the bonds and own the property.

John Cullen, whose Grand Heritage Hotel Group has owned the 116-year-old, 140-room Stanley Hotel for 29 years, told BizWest that Denver-based Sage Hospitality Group, which has 61 inns in its portfolio including the Oxford and Crawford hotels in Denver., will manage the hotel “for the next 15 to 25 years under the current contract.”

At the closing in four to five weeks, Cullen said, “$125 million of construction will be funded along with $60 million in reserves for rainy days and everything else. The best part is that not a single taxpayer dollar is going into this. It’s all privately funded bonds — but all the benefit goes to the taxpayers.

“All profits will go to arts programs in public schools in Colorado for fifth through eighth grades. They’ll be called Stanley grants, and they’ll be awarded by CECFA every year,” he said, adding that when the bonds retire in 20 to 35 years, “it’s $50 million a year to public-school arts programs. In the meantime, they get between 6% and 8% of the hotel’s profits as the bonds get paid off.”

According to a CECFA news release, “the expected bond issue of approximately $425 million will be used to retire existing debt for the Stanley Hotel campus, purchase the property and make renovations to the hotel to support future programming.”

The deal “curates it and develops it exactly the way I want to,” Cullen said, estimating that expanding the hotel by adding 65 luxury suites and fully developing the film center will “double the revenues of the hotel in five years.”

CECFA board chair Morris Price said in a prepared statement that “a significant portion of revenue from this project will go towards public benefit.” Price noted that CECFA will receive about $18 million over the term of the bonds that can be used to further its mission supporting Colorado’s educational and cultural charities. In addition, approximately $500,000 per year (nearly $30 million over the term of the bonds) from project revenue will go towards The Stanley Art and Culture Fund, which will be administered by Cullen and SPACE for the benefit of public middle-school arts education across the state.

“It breaks my heart to see public-school arts teachers using their own personal cash to buy arts supplies,” Cullen said.

House Bill 1295, the Creative Industry Community Revitalization Incentives legislation, was passed by Colorado lawmakers in May, helping to pave the way for CECFA to develop the plan to buy the Stanley from Grand Heritage and see the hotel’s film center completed after more than a decade of starts and stops.

Once complete, the Stanley Film Center will be “a two-story building with approximately 64,735 square feet, to include an approximately 864-seat outdoor amphitheater with a fire capacity of 1,200 (including standing room-only), an event center, a film museum, a sound stage and related amenities, to be constructed adjacent to the main hotel building and connected to the concert hall,” according to state documents. 

The return from the transaction for Grand Heritage is “all in bonds,” Cullen said. “I don’t get any cash from the sale. Whatever I take, I take in bonds at the back of the line. I’m essentially the equity in the bondholder group.”

Cullen said he would work as chairman of the SPACE board “for free, as a volunteer,” and added that “I promise to spend at least half my time living just behind the Stanley.”

The primary thing Cullen gets out of the deal, he said, “is complete validation of what I spent 29 years of my life doing. I’ll work for free, but I’ll get to live every single one of my dreams out and see the Stanley become a self-sustainable hotel that exceeds my wildest imagination.

“I bought it out of bankruptcy,” Cullen said. “There were dirt roads, holes in the roof, and 11 of the 14 buildings didn’t have utilities, and it was generating just $1.4 million in annual gross revenue.

“I walked into this hotel at the age of 31, and if somebody told me then I’m going to spend the next 29 years owning it and the next 35 building and developing it, I wouldn’t have been crazy to go back to Stapleton Airport and say this is too hard.

“But now we’re turning it over to the state in pristine condition,” he said. “We spent $70 million renovating it over the last 29 years, and it now generates $44 million a year in revenues and is one of the top 20 social media-followed hotels in the world.”

The hotel inspired Stephen King’s novel “The Shining” and its 1980 horror-movie adaptation by director Stanley Kubrick, and has capitalized on the macabre theme with horror film festivals and, in 2023, Cullen’s purchase of Nederland’s quirky Frozen Dead Guy Days festival and the opening of a cryonics museum in the hotel’s historic ice house that houses the frozen corpse of the festival’s namesake, Norwegian Bredo Morstoel.

“The cryonics museum gets transferred to the state,” Cullen said. It’s still under lease to the Scottsdale, Arizona-based nonprofit Alcor Life Extension Foundation, he said, and “they own the frozen dead guy.” The town now owns the festival through its Visit Estes Park tourism district, which receives all of the proceeds.

The hotel for years also has used its haunted reputation to lead “ghost tours” through the property. “We did 190,000 tours last year,” Cullen said. “Name another hotel that did that. That’s some Disney numbers.”

Blumhouse Productions LLC, the production company behind horror films and franchises such as “Get Out,” “Five Nights at Freddy’s,” “The Purge” and “Paranormal Activity,”  will serve as the Stanley Film Center’s exclusive exhibit curator.

Blumhouse and its parent companies NBCUniversal Media LLC and Comcast Corp. (Nasdaq: CMCSA) agreed on a deal to let the Stanley host four film festivals — with a new movie launched at each — over the next year. Blumhouse and affiliated streaming-video service Peacock took over the hotel last week for a series of “Overnightmare” events, offering four different two-night experiences last Friday through Sunday, each with horror movie-themed interactive challenges and film screenings.

“We sold out $100,000 worth of packages in 84 minutes for that one,” Cullen said.

He noted that Gov. Jared Polis announced in July that “Blumhouse is going to curate the museum at the Stanley that’s underneath the film center. There’ll be six movie sets from Blumhouse in a secret underground space. Every time they launch a movie, the set comes to the Stanley.”

Management at the Stanley is part of a regional push to bring the Sundance Film Festival to nearby Boulder, which was selected as one of the finalist cities to host the world-renowned event for a decade starting in 2027. If Boulder is selected, the Stanley and its film center would likely host some Sundance events during the festival week.

CECFA worked with many partners to complete the transaction, including the Colorado Office of Economic Development and International Trade which administers the Regional Tourism Act program that provides incremental state sales tax revenue that will help pay for the bonds. It also worked with Blumhouse, investment bank RBC, Saunders Construction, construction consultant 4Site Advisors, hospitality consultant RevPar International, and attorneys at Sherman & Howard, Kutak Rock, Butler Snow, and Spencer Fane.

For Cullen, the commitment to Estes Park has been ongoing. On Sept. 30, his Grand Heritage closed on the $35 million sale of its Fall River Village resort to the Estes Park Housing Authority to meet the tourism-dependent mountain village’s continued need for workforce housing.

“I’ve spent 30 years in Estes Park and realize how important the Stanley is to the town, in terms of its workforce, its tourism and its image,” Cullen said. When the hotel and film center project is completed, he added, “it will be half of the town’s revenues.

“My worst scenario would be that it gets sold to somebody that doesn’t respect how important it is to Estes Park and the state of Colorado,” Cullen said. “I’m hoping this gift solves that issue. It will be more security for the town of Estes Park by giving it to the state. That will mean Estes Park’s two biggest tourism draws, Rocky Mountain National Park and the Stanley, will be controlled permanently by the government. What better security than that.”

The Stanley was the seventh of 51 hotels Grand Heritage acquired, “but this is the one I kept, and it’s never failed me — through floods, pandemics, fires, wars, whatever,” Cullen said. “I’ve never given up on the Stanley, and it’s never given up on me.

“The Stanley will be my last hotel. I now hand it off, but I still have responsibility for curating it for 35 more years. At the end of the day, I will have worked 64 years at the Stanley — four times longer than F.O. Stanley himself did.”

“But at the end of the day, it’s not about me, but it’s about fifth- through eighth-grade kids,” Cullen said. “I have this dream that one of them will be on the stage at the Oscars, saying ‘I want to thank the Stanley for helping my career.’”

At Wednesday’s meeting of the state agency and its partners, Cullen said, “everyone used the phrase ‘very unique’ or ‘most unique’ to describe this deal. They also said the word ‘complicated,’ and it’s complicated because I made it that way. We have so many fantastic content partners that make it work.

“My final words at the meeting,” he said, ‘were, ‘Thank you, everyone — and buckle up.’”

Editor’s note: BizWest managing editor Lucas High contributed to this report.

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