Adams Mark deal

[vicupstate]

Hilton, Hyatt, Westin could check in at Adam's Mark

None of the three seem likely to take over property any time soon.

By CHRISTOPHER CALNAN

The Times-Union

Hilton, Hyatt and Westin hotels are the three strongest full-service prospects to buy the downtown Adam's Mark since Marriott International Inc. dropped out of discussions, industry analysts said Thursday. But while all three have looked at the property in recent months, none seem interested so far.

But Hilton said Thursday it isn't considering the Adam's Mark. Starwood Hotels and Resorts Worldwide Inc., which owns the Westin brand, is already considering another downtown location for a hotel.

The Hilton, Hyatt and Westin full-service hotel chains seem like natural candidates to take over the Adam's Mark hotel, according to some industry analysts.

JOHN PEMBERTON/The Times-Union

"At the prices they charge at the Adam's Mark, it almost needs to be a Hyatt, Westin or Marriott," said Gary Andreas, a principal in St. Louis-based hospitality industry consultancy Tellatin Andreas & Short. "Those would be the alternate brands to a Marriott."

And Hyatt, one industry observer said, has already "discounted" buying the hotel.

Marriott spokesman John Wolf said Thursday his company is no longer negotiating for the 966-room Adam's Mark, Jacksonville's largest hotel. Talks stalled after the city refused a request from Marriott and a private investment group for an $8 million loan to buy and renovate the hotel.

The group told the city if it didn't get the loan it would kill the deal. Wolf declined further comment on the issue Thursday.

"We don't discuss ongoing or past negotiations," he said.

Susan Wiles, Mayor John Peyton's spokeswoman, said Peyton has placed a moratorium on incentive packages and the hotel received incentives when it was built.

"It's just not the right project at the right time," she said. "This project has already been incentivized by $21 million in public money."

Fred Kummer, owner of the hotel's parent company, St. Louis-based HBE Corp., has said he was selling the Jacksonville hotel for about $100 million. City records indicate that Kummer company invested more than $130 million in the hotel that opened in February 2001.

Kummer didn't return telephone messages seeking comment Thursday.

The Adam's Mark is scheduled to be the National Football League's headquarters during next year's Super Bowl.

Marriott and the private investment group offered to buy the hotel for $97.1 million, according to city records. The group and Marriott also planned to spend about $18.5 million on renovations and other related costs.

The city's loan would have been paid back, plus 5 percent annual interest, through a 2 percent increase in the hotel's room surcharge.

Kitty Ratcliffe, president of the Jacksonville & the Beaches Convention and Visitors Bureau, said Hilton, Hyatt and Starwood have all looked at the Adam's Mark property. Hyatt rejected it, but "that was months and months ago," Ratcliffe said.

Market conditions have changed since then, so the hotels may reconsider earlier decisions, she said.

Hilton spokeswoman Kathy Shepard said Hilton hasn't been acquiring hotels lately, and the company isn't looking to buy the Adam's Mark.

Ratcliffe said the hotel's existing management has been trained and is capable of operating the hotel during the upcoming Super Bowl.

"That has not been of grave concern to me," she said.

Jacksonville Super Bowl Host Committee spokeswoman Heather Surface said ownership changes at the Adam's Mark would be a non-issue because agreements with the hotel would be transferred to any new owner.

Peter Ricci, assistant professor of lodging management at the University of Central Florida's Rosen College of Hospitality Management, agreed that Hilton and Westin would be strong prospects for the Adam's Mark purchase. He also added Crowne Plaza and Radisson to the mix.

"Hilton and Westin are real natural matches," Ricci said. "They have more similar products that appeal to the group meeting market."

In addition to Westin hotels, Starwood owns hotel brands including St. Regis, The Luxury Collection, Sheraton, W and Four Points by Sheraton.

It's improbable that HBE would pull the property off the market after the Marriott deal fell through, Andreas said.

"They're selling off their hotels, and everyone in the industry realizes that," he said. "I think at this point they're past the point of no return."

The Adam's Mark was initially expected to cost $120 million to build. As of Dec. 31, 2003, its owners had made a $130.6 million investment in the project, according to the Jacksonville Economic Development Commission.

[vicupstate]

My observations...

1) Marriott has a lot of nerve to ask for additional incentives for this property. They are getting supposedly a $130 million property for $97 million and then they want another $8million from taxpayers for renovations? The building is only two years old. Why does it need renovations? I suspect that this $8mill is for new signage and the like.

2) When it was first announced, there was no mention of incentives when Marriott expressed interest in the property. That is not usually the case.

3) It seems unlikely that Hilton would have any interest in the property considering they are just across the river now.

4) If the Adam's Mark can't find a buyer, you have to wonder why Westin wants to build new. I guess they only want 200-300 rooms. It would seem the supply of hotel rooms downtown must exceed the demand, or else the Adam's mark property would be getting more interest.

5) It certainly seems less likely that Peyton will approve incentives for the Westin to build a new hotel, given this situation.

6) If Adam's Mark's parent company is getting out of the Hotel business, what is going to happen if they don't get a buyer for this unit? An empty hotel on the river would definitely be a black mark against downtown redevelopment. I certainly hope this turns around.

[vicupstate]

Adam's Mark to buyers: Never mind

Owner had 'weak moment' with Marriott but says hotel isn't for sale.

By CHRISTOPHER CALNAN

The Times-Union

The downtown Adam's Mark hotel is off the market after a proposed deal with Marriott International Inc. fell through. In fact, the hotel was never on the market, its owner said Friday.

Fred Kummer, president of the Adam's Mark's parent company, HBE Corp., said he never intended to sell the property, but Marriott approached him with an offer he couldn't help considering.

"They caught me at a weak moment, the hotel is not for sale," Kummer said in a telephone interview from his St. Louis office. "It's been a terrible inconvenience. They made an offer and I felt I was dealing with people who would consummate the deal."

Marriott spokesman John Wolf declined to comment on the matter.

Although Kummer has been selling many of his hotels so he can concentrate on his core business of building hospitals, he has stated several times an intention to keep Jacksonville's 966-room Adam's Mark, the city's largest hotel.

After saying in May it was negotiating with Kummer, Marriott said this week it stopped its plans to acquire the 3-year-old property that's scheduled to be the National Football League's headquarters during next year's Super Bowl.

Marriott and a private investment group offered to buy the Adam's Mark for $97.1 million if they received an $8 million loan from the city, according to city records. The group and Marriott planned to spend $18.5 million on renovations and related costs, but the city refused the request and the deal fell through.

The $97.1 million figure is close to the city's property appraisal, which HBE has disputed in court the past three years.

In 2002, HBE said the property should have been assessed at $56 million instead of $95.7 million, which was the Duval County Property Appraiser's assessed value. The Appraiser's Office said it valued the property at $97.4 million in 2003, $300,000 more than what the Marriott group recently offered to pay.

Property Appraiser Jim Overton said Marriott's offer validated the county's appraisal figures.

"We were comforted by the number that they were discussing because we think that's a realistic value for the property," he said.

Kummer said Friday challenging property valuations is a routine part of doing business.

"We dispute the value of all of our real estate," he said. "You have to, everyone does."

Kummer also said the Marriott group made "a very aggressive drive to acquire" the Adam's Mark.

"I never had it on the market," he said. "These people approached me."

But Gary Andreas, a principal in St. Louis-based hospitality industry consultantcy Tellatin Andreas & Short, said other hotel chains were looking at the Adam's Mark a year ago. That wouldn't have happened if HBE had not put the property on the market.

"There's a lot of face-saving going on here," Andreas said. The hotel chains "would have been told [Adam's Mark] was available and gotten at least some basic operating information before they came."

Kitty Ratcliffe, president of the Jacksonville & the Beaches Convention and Visitors Bureau, said earlier this week Hilton, Hyatt, and Westin's parent company, Starwood Hotels and Resorts Worldwide Inc., have all toured the downtown hotel.

But Ratcliffe said Friday it's possible the hotels were just speculating Kummer would sell the Jacksonville hotel if he got the right offer.

"Certainly other companies were looking at it," she said, "whether they were invited I don't know."

The 75-year-old Kummer has unloaded about 13 of his 24 Adam's Mark hotels, Andreas said. In March, Kummer told the St. Louis Post-Dispatch he intended to sell all the hotels except five: Denver, Dallas, Buffalo, St. Louis and Jacksonville.

Kummer would probably sell all but the flagship St. Louis Adam's Mark, Andreas said Friday.

"He would hang onto that as a monument to himself," Andreas said.

The Adam's Mark was initially expected to cost $120 million to build. However, city records indicate its owners had invested $130.6 million in the property as of Dec. 31, 2003.

[bobliocatt]

Interesting chain of events. The last time I heard Westin only wanted 197 units. With 966 rooms, the Adams Mark is basically just too big IMO. Its much larger than any of the hotels in downtown Tampa & Orlando and those metros are twice the size of Jax's.

[Guest donaltopablo]

I was wondering what was going on with the Adam's Mark chain. I noticed several of them had been sold and rebranded.