City isn't going to sit by and wait for next development on downtown Five Seasons Hotel; even Mayor Corbett wants a consultant

City Hall is trying to prepare for the next chapter in what has become the unhappy saga of the city's only downtown hotel, the Crowne Plaza Five Seasons Hotel.

City Manager Jim Prosser on Tuesday said the city is in the process of hiring a hotel consultant to arm the city with some facts about the hotel, which is joined at the hip with the city's U.S. Cellular Center.

The center is in the midst of a $15-million upgrade, thanks to a state I-JOBS grant, and the city remains optimistic that the U.S. Department of Commerce's Economic Development Administration will award the city another $35 million to build a new convention and events center right next door.

The city can't have a failing hotel in the middle of such government investment, both Prosser and Patrick DePalma, the chairman of the city's Five Seasons Facilities Commission, said Tuesday afternoon.

Even brand-new Mayor Ron Corbett -- whose just completed campaign for mayor focused on what he called the too frequent hiring of out-of-state consultants -- agrees with the hiring of a hotel consultant. The city has to figure out how much of an asset the hotel is to the downtown, Corbett said on Tuesday evening.

Prosser and DePalma said hiring a hotel consultant will help the city determine the current dollar value of the 275-room hotel, the cost to upgrade the hotel so it is a “competitive full-service hotel,” and the hotel's dollar value after such an upgrade.

The 16-story hotel was purchased from a longtime owner by an Atlanta-based entity, Kronos Hotels LLC, in the spring of 2007. Kronos' creditor, CW Capital Asset Management, Washington, D.C., foreclosed on Kronos in October of 2008, and just two weeks ago, the creditor took control of the property at a sheriff's sale. Prism Hotels and Resorts, Dallas, Texas, continues to manage the property for the creditor.

In hiring a hotel consultant, the city also wants recommendations on what the hotel's size, features and amenities should be to maximize the hotel's value. Part of that analysis, Prosser suspected, might include a determination of the property's value as a smaller hotel with some of the rooms converted to condominiums or other uses. DePalma, though, said the hotel is not too large. Mayor Corbett said he's not so sure. It's operated under a number of hotel flags without great success, he said.

DePalma said hiring a hotel consultant only makes sense as the city, state and federal governments contemplate an investment of some $65 million in a new events center and in the U.S. Cellular Center.

“We're cautious about allowing another company like Kronos to come in that may have limited access to capital and are only looking to operate the hotel on a less-than first-class basis,” DePalma said. “ … We can't allow that to happen. We can't gamble on the hotel stepping up to the plate and putting in the dollars necessary to make sure it complements the event center.”

The city, Prosser noted, holds lease arrangements with the hotel for air rights, the hotel's ballroom and a parking ramp next door. Those leases give the city a first right of refusal to match any proposed sale price, which he said indicates that the city “clearly contemplated” from the start the idea of owning the hotel should it become necessary.

“I guess that's a possibility (now),” he said.

However, Prosser said hiring the hotel consultant was more intended to allow the city to gather relevant data for a time when perspective buyers come to town. The creditors have made it clear they don't want to hold on to the property for a long period of time, he said.

Prosser said the failure of the recent owner, Kronos Hotels LLC, came, in part, because it paid too much for the hotel. The city hopes that the data that it collects now will help it better understand what the value of the property might be so a next owner does not make the same error, he said. The City Council, he added, also might be asked to provide some incentives to a new owner.

“Whoever comes in here, we're going to want them to succeed,” Prosser said. “But we're not going to want to underwrite them paying too much for the hotel. So we're going to want to know what that value is.”

“We want to be in a position where we can respond quickly if there's an opportunity there,” the city manager continued. “Certainly, that's part of our motivation. We think (the hotel) is one of the critical elements of a signature downtown.”