Advertisement

Hagerstown Hotel & Convention Center avoids foreclosure

August 08, 2009|By ARNOLD S. PLATOU

HAGERSTOWN -- One of Hagerstown's largest hotels came close to foreclosure last week.

On Friday, Bahman Inc., which owns the Hagerstown Hotel & Convention Center, worked out a tentative deal with BB&T, the lender, to head off a foreclosure auction scheduled for Monday, according to Roy Arnold, the hotel's director of sales.

"As it stands, there will be no sale," Arnold said Friday evening.

During an earlier interview, before the tentative agreement, Arnold said, "This is a very big opportunity for us to continue to operate and operate in a manner in which this town is accustomed. We're not going to close."

Survival of the 108-room hotel, on 6.1 acres at 1910 Dual Highway off Interstate 70, is "very important" to other local hotels and tourism businesses, a top local tourism official said.

Advertisement

Hagerstown Hotel & Convention Center -- with lodging, a restaurant and facilities for meetings -- is among just four full-service hotels here, said Tom Riford, president and chief executive officer of the Hagerstown-Washington County Convention and Visitors Bureau.

"It is the full-service that attracts small- to medium-size conventions. This area depends on that," Riford said. "A convention can come to Hagerstown with, say, 1,500 people. They're going to fill up several hotels.

"So a full-service hotel greatly impacts other hotels and that's why we really want that lodging property to be able to move forward in a positive direction. We are cheering from the sidelines that, hopefully, that hotel can make it."

If a rescue deal hadn't been brokered, the property was scheduled to be offered at an auction in front of the county courthouse at 95 W. Washington St. at 11 a.m. Monday.

Katheryn Hughes, a real estate specialist with American Auctions & Appraisals Inc., said Tuesday that her company "probably had eight to 10 calls" from people inquiring about the sale. She said she also had calls from brokers, representing clients.

'A double hit'

Watchwood LLC bought the hotel in November 2006 for $7.4 million, The Herald-Mail reported at the time.

Today, it is listed as belonging to Bahman Inc., of Washington, D.C., which Riford said has the same ownership as Watchwood.

The hotel was purchased from longtime Hagerstown businessman Nick Giannaris. It opened in 1970 and the Giannaris family took on the hotel 10 years later.

Arnold, who began working in July at the hotel, said he thinks its troubles began about a year or a year and a half ago.

"I think you can attribute that to when gas was four bucks a gallon," he said. "Fluctuation of gas prices has made it to where Mom, Dad and the kids aren't planning vacations like they used to."

In addition, "not as many people are going out to dinner. That takes a chunk out of our business. Not as many people are having social events. That takes a chunk out of our business," he said.

Another big factor has been the recession's impact on business travel, Arnold said. "Corporate income is down and one of the places they're cutting back is overnight travel."

Then, too, there's the popularity of the Internet, giving businesses the chance to hold meetings in cyberspace -- instead of at hotels.

"The Internet and the economy, it's a double hit," Arnold said.

For Hagerstown Hotel, one result is its room occupancy rates are down. One night last week, just 28 percent of its rooms were taken, whereas "two years ago, that would have been in the 60s," he said.

And, as other hotels have opened here, there is more competition for business, he said.

But Arnold said the hotel's owners have been determined to keep the business, which has about 90 full- and part-time employees.

"We continue to promote the hotel. This morning, I bought radio advertising. We're doing buffets, pool parties ... These are all things that if you're not going to be here a week from now, you're not going to be buying advertising still," he said.

Another sign of the hotel's intent to survive is that Bahman paid the hotel's county property taxes of $13,700 on June 29. That was just a day before the property would have been offered at a tax collector's sale.

A lost summer

Riford said the hotel's troubles are, perhaps, more seeded in a delay in its 2006 purchase and other unique problems than they are in the recession.

Riford said the sale "went through in spring of 2006, but the hotel didn't transfer until November" because details concerning the Four Points by Sheraton chain had to be worked out.

The delay cost the new owners the extra revenue they'd normally have gained from a busy summer going into a slower winter.

"They just had bought a property, yet they didn't have a whole summer, a real busy summer of income. They did a bunch of upgrades. With poor cash flow, that got compounded when the economy began to go down," Riford said.

Plus, he said, "they went through a lot of staffing challenges."

The Herald-Mail Articles
|
|
|