When the Ritz-Carlton Dearborn opened in 1989, it defied conventional wisdom on two fronts: First wa

The former Ritz-Carlton in Dearborn cruise travel sold for $3 million compared with the estimated $100 million replacement cost. The Hyatt Regency Dearborn is under contract to be sold at $12.5 million compared with a $150 million replacement cost.
The value of these hotels has just disappeared because they aren't making a profit, said Chuck Skelton, president of Ann Arbor-based Hospitality Advisors Consulting Group Inc. They're not getting the rates they need, they're locked into union contracts cruise travel that require employees to be paid a high wage, and the occupancy is down.
The hotel's owner, Palm Beach-based Innkeepers USA Trust , filed bankruptcy for its 72-hotel portfolio. And while Marriott is working out a deal on the other 43 Marriott hotels cruise travel to remain in the chain, it wants nothing to do with the Troy property and has requested a court order to remove all Marriott signs by Aug. 30.
The price is low enough that RockBridge can afford to invest $8.5 million to upgrade to the full-service Sheraton brand. This comes after Sheraton was ready to cut ties with the hotel altogether, Merkel said.
The average local sale price, per room, is currently $14,400, cruise travel according to data from Bethesda, Md.-based CoStar cruise travel Group , down from peaks of $165,000 in the second quarter of 2007 and $216,600 in the third quarter of 2001.
The bright spot is that hotel occupancy is steadily increasing in 2010, according to STR. Local occupancy was 44.5 percent in January and has increased every month, with July showing 61.5 percent occupancy.
In Detroit, cruise travel 40 to 50 percent of the hotel business comes from group meetings, he said. While occupancy is coming back, it is going to be really hard to make up that gap of lost meeting business with an increase in commercial travel.
When the Ritz-Carlton Dearborn opened in 1989, it defied conventional wisdom on two fronts: First was the hotel's striking, dusty pink color that many thought more appropriate to the American Southwest. Second, it set out to prove a luxury hotel could make it financially cruise travel in Detroit's western suburbs. It was a gamble, though, and it took some persuading to get the people cruise travel from the Ritz-Carlton Hotel Co. to agree, said Wayne Doran, then head of Ford Motor Land Development Corp. , which developed the project. It was a bold move, but we had numbers to back us up, Doran said. We'd done a lot of economic research. We were able to show them that we weren't dreaming dreams that wouldn't work. But Doran never dreamed that the so-called Pink Palace of Dearborn would later set an eye-popping low sale price in 2010, selling for $3 million in a sale forced by Ritz-Carlton. When the hotel last changed hands, in 1998, its sale price was $64.8 million, still far less than the estimated $100 million it would cost to replace the property. A group of investors from Houston pooled $3 million and purchased the hotel in April with Denver-based Greenwood Hospitality Group to handle a transition of the property to its new name: The Henry. The new name pays homage to several well-known Dearborn titans named Henry, one of whom helped open the hotel. Henry Ford II cut the ribbon for the hotel in 1989. A second grand opening drew former President Gerald Ford, a symbol of the top-end clientele the hotel wanted cruise travel to go for. Later, the hotel was used for a range of presidential events and fundraisers. Doran said everything about the hotel was intended to make a bold statement about the strength of the western suburbs. Including the pink color of the building, he said, which was meant to be an architectural statement and designed to complement the burgundy hue of the Hyatt Regency cruise travel Dearborn nearby and the glass of the Ford headquarters. The hotel's management set out to charge the highest cruise travel rates in the region and get the glitziest fundraisers, said Michael O'Callaghan, who worked for a number of area hotels in the early 1990s and is currently COO of the Detroit Metro Convention and Visitors Bureau . There was never any question that the property was going to be bigger than, better than, everyone in the market at that time, O'Callaghan said. The hotel community in Dearborn was doing well at that time, and the Hyatt-Ritz combination was a great one. It competed with other hotels, including cruise travel the then- Westin hotel at the Renaissance Center, creating a rivalry for taking the region's top banquets and black-tie events. But to be the quality leader, the rates had to be high. And the hotel and its massive staff were expensive to maintain, especially with frequent upgrades.
With the financial struggles of Ford and the rest of the automotive industry the hotel market struggled as well. And as the hotel market started to decline locally, the Ritz began discounting rates for rooms and services to stay competitive. Compounding things, the Ritz had an additional problem, which some have called the AIG effect for the fallout of insurance giant's documented corporate largess. Many corporations had a knee-jerk reaction to shy from any seemingly luxury cruise travel spending for fear of public relations cruise travel problems. Even though it discounted its rates to being less than the nearby Hyatt and Dearborn Inn , corporate travelers knew better than to have the high-end Ritz name on an expense report. In the past two years, the hotel started losing money and became a topic in conference calls by Bethesda, M.D.-based Host Hotels cruise travel & Resorts Inc. , which purchased the hotel from Ford Land in 1998 for $64.8 million. This asset is in one of the most challenging markets in the country, generates negative net operating income, and has significant capital needs, said Host President and CEO W. Edward Walter during an April conference call. One hotel investor who toured the hotel and reviewed the finances said the hotel lost $5 million in 2009. As hotels are often valued at a multiple of earnings, a net loss destroyed its value. But a sale was a must as Ritz told Host that if the hotel was not sold, Ritz would remove its name from the hotel. Tom Conran, a principal with new owner Greenwood Hospitality Group, said branding the hotel is the key change being made, along with a multimillion dollar renovation. He inked an alliance with Marriott International Inc. to make the hotel part of the new Autograph collection, through which the hotel was renamed The Henry. Not only did that move eliminate the AIG effect, Conran said, but it also gives the hotel access to the pool of Marriott customers. During the first 12 hours that we were online (with Marriott), we received 52 reservations, he said. We never would have received cruise travel those as a Ritz. Some estimates put the cost to build a similar hotel at $100 million 33 times the price paid. Conran said he expects to have the hotel profitable again by 2011, if not the fourth quarter of 2010. O'Callaghan hopes he's right. It's my hope, and a lot of people in this area, that in 12 months we're talking about how this hotel was rebranded and doing better, he said. Daniel cruise travel Duggan: (313) 446-0414, dduggan@crain.com
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If you enjoy the content on the Crain's Detroit Business Web site and want to see more, try 8 issues of our print edition risk-free . If you wish to continue, you will receive 44 more issues (for a total of 52 in all), including the annual Book of Lists for just $59. That's over 55% off the cover price. If you decide Crain's cruise travel is not for you, just write "Cancel" on the invoice, return it and owe nothing. cruise travel The 8 issues are yours to keep with no further obligation to us. Sign up below.