Riverside [[Pontchartrain) Hotel closed

[cmubryan]

Anyone have any insight as to when the hotel closed and if there are any plans to reopen soon? I was just surfing the net and noticed they took the website down [[detroitriversidehotel.com) and it's no longer on the Shubh Hotels website. I called their mainline and got a recording stating the hotel is "shut down for repairs and to leave a message."

I know they have been having major financial issues and maybe they finally went into foreclosure and were forced to close. Truly a shame considering the hotel was renovated less than two years ago and has nice rooms and public areas.

[detroitbob]

I remember reading recently that they were arranging a new alliance with another hotel chain for booking and branding...that may explain the web site going off line. I am, not however sure what is currently going on.

[softailrider]

Anyone have any insight as to when the hotel closed and if there are any plans to reopen soon? I was just surfing the net and noticed they took the website down [[detroitriversidehotel.com) and it's no longer on the Shubh Hotels website. I called their mainline and got a recording stating the hotel is "shut down for repairs and to leave a message."

I know they have been having major financial issues and maybe they finally went into foreclosure and were forced to close. Truly a shame considering the hotel was renovated less than two years ago and has nice rooms and public areas.

Shut down early last week, I think it was still open last weekend. The handwriting has been on the wall for a few months, it was being run by whoever foreclosed on it.

I agree, the previous owner spent millions on that renovation- all for nothing it would appear.

Hotel-Motel business in this area is TERRIBLE, even newly built properties are suffering.

[John]

This is all tied in with Shubh’s problems in Pittsburgh. Shbuh used the Pontchatrain as collateral to secure their debt with employees of the Pittsburgh Hilton. It sounds to me like the Pontchartrain is, or will shortly be, owned by a Pension fund from Pittsburgh.

Beleaguered Pittsburgh Hilton owner owes $1 million

[BShea]

From Crain's real estate reporter Dan Duggan on Aug. 23:

Pontchartrain closed

The struggling Detroit Riverside Hotel — formerly the Hotel Pontchartrain — has closed, at least temporarily.

On the hotel's reservation line, a phone message says that it is “shut down for repairs,� though no end point is given for the work. A posted notice on the hotel door last week said “closed for remodeling.�

Last August, the hotel was renamed Detroit Riverside Hotel after the Sheraton franchise broke ties with the hotel owner, Boca Raton, Fla.-based Shubh Hotels L.L.C.

In April, the Atlanta-based InterContinental Hotels Group announced the hotel would have the Crowne Plaza flag by July but Caroline Counihan, a senior manager of media relations for IHG, said the Crowne flag won't be in effect until the end of the year.

She referred all questions to Shubh. Shubh CEO Atul Bisaria did not answer his office phone and the phone system does not accept messages.

— Daniel Duggan

[Parkguy]

InterContinental Hotels are top-notch.

[crawford]

It's closed, because of the Book-Cadillac, the Fort Shelby and the hotel casinos. It won't be the last to close.

As I cautioned when the state of MI decided to use scarce taxpayer dollars to add thousands of downtown hotel rooms, you cannot grow hotel markets by adding hotel rooms. You only grow the market by stimulating demand.

The state subsidized the doubling of downtown hotel rooms, when the overall market demand was flat. Guess what happens?

The Athenium Suites, the River Place hotel and the St. Regis will be next.

I think Book Cadillac was a worthwhile use of taxpayer dollars. The casino hotel requirement is idiotic, and the Fort Shelby was a poor investment.

[davewindsor]

It's closed, because of the Book-Cadillac, the Fort Shelby and the hotel casinos. It won't be the last to close.

As I cautioned when the state of MI decided to use scarce taxpayer dollars to add thousands of downtown hotel rooms, you cannot grow hotel markets by adding hotel rooms. You only grow the market by stimulating demand.

The state subsidized the doubling of downtown hotel rooms, when the overall market demand was flat. Guess what happens?

The Athenium Suites, the River Place hotel and the St. Regis will be next.

I think Book Cadillac was a worthwhile use of taxpayer dollars. The casino hotel requirement is idiotic, and the Fort Shelby was a poor investment.

Or maybe the price points were wrong for this market in these economic times. How much did they charge for Fri/Sat nights? I remember a thread a few days ago where someone was complaining they couldn't find a reasonably priced hotel room in downtown for September 12. If it were $50 a night for a basic hotel room, I'm guessing there would be a waiting list for weekends...

[spiritofdetroit]

Greektown Hotel's $99 a night deal has kept that hotel at 80% capacity since it opened, selling out almost every weekend - sure, they comp a lot of rooms, but there is no doubt that that hotel has been a success.

The Atheneum is still used by a number of large firms downtown as their main business hotel, and at least when I have stayed there during the week it has seemed pretty darn busy. Not sure how weekend travel is there though.

The Pontch has been in trouble for a long time - they can't fill rooms because of ownership. Remember, the hotel was booked solid for the convention in which it's most recent woes were made public. Bad management will do that, and that is what will probably cause the St. Regis to close it's doors as well. Other than that, I wouldn't expect to see any closings anytime soon.

The casino hotels aren't going anywhere, and the BC and Fort Shelby, even if business is hurting, will remain open for sometime. The Ren Cen is still often booked, the Hilton Garden Inn is also very steady [[one reason Ferchill went for it on the BC).

[John]

It's closed, because of the Book-Cadillac, the Fort Shelby and the hotel casinos.

Not true. Its closed because of poor management and because its owner used it as collateral in conjunction with a hotel deal involving the Pittsburgh Hilton.

Even after several news stories that put a bad light on the Pontch, it was still sold out on several weekends this summer.

[raptor56]

Closed due to poor management. plain and simple. This is the same hotel that was overbooked for the recent Baptist Convention, then promptly lost all air conditioning and had their employees all strike due to no paycheck in the middle of the convention week and 80 degree heat. As mentioned in the news, the management was no where to be seen during this fiasco and tried their best to duck customers and reporters when they finally did show up a few days into the mess.

[crawford]

Not true. Its closed because of poor management and because its owner used it as collateral in conjunction with a hotel deal involving the Pittsburgh Hilton..

Then why is it shuttered, and why can't they find a buyer? It's essentially now an abandoned building.

And why are all the other downtown hotels losing money? Their ownership sucks too? All of them?

Even after several news stories that put a bad light on the Pontch, it was still sold out on several weekends this summer.

Who cares? Sometimes there are big events, like the Super Bowl and the Gospel convention, and all rooms are taken for a day or two. Doesn't mean a hotel is healthy and making money.

[crawford]

If it were $50 a night for a basic hotel room, I'm guessing there would be a waiting list for weekends...

LOL, if the price point for a downtown hotel totals $50/night, then it's time to pull down the gates and shut things down.

You can't come close to making money at $50/night. That means the hotel is getting maybe $40 per room, which isn't close to breaking even, unless you're managaing a roadside motel in the U.P. or something.

[spiritofdetroit]

crawford,

what makes you say that EVERY hotel downtown is losing money? Why are they open then?

[digitalvision]

I've heard so many varied stories on how the hotel market is doing downtown I don't know what to believe. Talked to people who say it rocks, and they're always full - talked to people who says it's always empty and horrible. I'm not in the hotel business, but I do work with event people and they're almost never doing Detroit assignments anymore. Their usual reason is that labor is too high in the city [[required to use union at most hotels, and it's too rich for their blood in this economy, doing Novi, Birmingham or Troy instead) or their client refuses to do it in the city until Cobo is actually fixed [[even with the new authority, they're taking what could best be described as a "skippers rule" approach - believe it when they see it). The news stories on Cobo earlier from the Auto and other shows made even pitching the place a no-go for them.

As to hotels though, the truth probably is in the middle, on a property-by-property basis.

If the Ponch does not reopen by the auto show, every feature story about the city is going to talk about how "even the hotel across from the convention center is closed." It needs to re-open - or at least be open for the auto show, or else it's going to be a PR nightmare.

[crawford]

crawford,

what makes you say that EVERY hotel downtown is losing money? Why are they open then?

I don't look at their books, but I do know that downtown vacancy is generally below 50%, and is the lowest of any central business district in the nation.

Given that hotels nationwide have been gettting killed in the last 12 months or so, it's a fair bet that the worst hotel market in the nation is unprofitable.

As to "why are they open", the three casino hotels have to be open, no matter how much money they lose. They are not allowed to even close individual rooms, or they lose their casino rights.

The other hotels obviously don't have to be open, which is why they will be walking a minefield in the coming months/years.

Keep in mind that they would usually not just shut down. They would wait for the management contract/franchise agreement to expire, and I don't know the timetables for the major downtown hotels.

[croweblack]

I don't look at their books, but I do know that downtown vacancy is generally below 50%, and is the lowest of any central business district in the nation.

Given that hotels nationwide have been gettting killed in the last 12 months or so, it's a fair bet that the worst hotel market in the nation is unprofitable.

As to "why are they open", the three casino hotels have to be open, no matter how much money they lose. They are not allowed to even close individual rooms, or they lose their casino rights.

The other hotels obviously don't have to be open, which is why they will be walking a minefield in the coming months/years.

Keep in mind that they would usually not just shut down. They would wait for the management contract/franchise agreement to expire, and I don't know the timetables for the major downtown hotels.

Occupancy rate is at or near 40% and will fall even more in the winter.

Generally in the hotel industry if your rate is 35% or lower you are bringing money to the table instead of just staying afloat.

My guess is:
Westin will pull out by 2014 and they may be able to scramble to find another flag but by 2018 they will be closed

fort shelby does not look good either but I think the BC will be the first on the chopping block

[EastSider]

It's not just the current ownership that's the problem with the former Pontch. It was already a dump when they got it.

No matter who's owned it in the last 15 years, it's always struggled and had a less-than-graceful fall into closure. I think there's something wrong with the building itself.

[GPCharles]

The troubles with the Pontch go back to the days when it was owned by Keating and re-financed 5+ times in one year, each time taking money out. That was during the S&L debacle.

[401don]

After the Book Cadillac closed the Pontch was the only business hotel downtown for many years, except for the Ren Cen. The Marriott/Courtyard book a lot of corps as well as have their own convention business that doesn't require Cobo. Mostly, the other hotels downtown have their niche except for the Fort Shelby, which I think is really struggling. Just bid 50 bucks a night on Priceline and you'll often get the Shelby. If business was good they wouldn't be accepting that low of a rate. The Pontch's rooms are very small. Even if they acquire a major chain affiliation, I don't think there's enough convention business to support all the hotels downtown. My guess is the Pontch stays shuttered and the Holiday Inn joins it within the year.

[Rocko]

From Freep.com:

Former Pontchartrain is shuttered again

Riverside Hotel is across from Cobo

By JOHN GALLAGHER
FREE PRESS BUSINESS WRITER


Detroit’s Riverside Hotel, long the most distressed hotel in the downtown market going back to its days as the former Pontchartrain, is closed and will be put up for sale again.


The latest chapter in the tangled financial history began in early July, when Mutual Bank, a suburban Chicago lender, foreclosed on Shubh Hotels Detroit LLC, a partnership based in Boca Raton, Fla., that had purchased the old Pontchartrain in 2005.


Then on July 31, the Illinois Department of Financial Professional Regulation’s division of banking closed down Mutual Bank as insolvent and appointed the Federal Deposit Insurance Corp. as receiver. United Central Bank of Garland, Texas, assumed Mutual’s deposits and assets, including its loans to the Riverside Hotel.

Royal Oak attorney David Findling, the local receiver appointed by the Wayne County Circuit Court after Mutual foreclosed on Shubh, said the hotel requires significant repairs before it can reopen.

Eventually he will try to find a buyer, Findling said, with the only question being whether United Central Bank wants to put enough money into the hotel to make the repairs and reopen it prior to a sale.

An operating hotel would fetch a better price than a closed hotel, he said, because an operating hotel enjoys a revenue stream and a certain amount of goodwill in the community.

“The real question is whether the bank wants to invest that money for that good will, and that’s a decision that the bank makes,� Findling said today. “My goal is to not have this be another empty building in the city.�

Taking the hotel’s approximately 400 rooms off the downtown market temporarily may not hurt Detroit’s ability to book conventions, since downtown has recently added 2,000 new rooms at the three casino hotels and the renovated Westin Book Cadillac and Doubletree Fort Shelby.

Even so, the troubles afflicting the Riverside are distressing, said Michael O’Callaghan, executive vice president of the Detroit Metro Convention & Visitors Bureau.

“The inventory of rooms in the downtown area has roughly doubled in the past three or four years and we’ve got this economic downturn,� O’Callaghan said today.
Even so, he added, “It’s still disappointing to see a hotel positioned as nicely as that one is to go through the sort of problems that one has been plagued with for so many years.�

The hotel has been through multiple owners and name changes over the past two decades. Even being located just across Washington Boulevard from the Cobo Center convention center could not guarantee success.

Shubh had said in 2005 that it intended to remake the ailing Pontchartrain as a first-class hotel. For various reasons, those hopes fell well short of becoming reality. Before Mutual foreclosed, Shubh had not paid the hotel employees for about two months, Findling said.

In one particularly bad experience, guests staying there in late June for the National Baptists Convention left early after complaining of no air conditioning and other problems.

Contact JOHN GALLAGHER: 313-222-5173 or gallagher@freepress.com.


http://www.freep.com/article/2009083...huttered-again

[John]

It's essentially now an abandoned building.

The place has been closed for 72 hours and you are now classifying it as an abandoned building. Is that the new standard?

And why are all the other downtown hotels losing money?

I can tell you that is not the case. You are stating something as if it is fact, when in fact you have no knowledge of what you are talking about. Based on your posts on this thread, I now know its pretty safe to skip over whatever posts you happen to make in the future.

[cmubryan]

http://www.clickondetroit.com/video/20653648/index.html

[croweblack]

[quote=John;62866]The place has been closed for 72 hours and you are now classifying it as an abandoned building. Is that the new standard?



The new owners will have to dump at least 3-4 million in renovations to reopen and make it viable. Dumping that kind of money into a property worth at the most 1-2 million makes it well on its way to abandonment.

[davewindsor]

[quote=croweblack;62981]

The new owners will have to dump at least 3-4 million in renovations to reopen and make it viable. Dumping that kind of money into a property worth at the most 1-2 million makes it well on its way to abandonment.

Where do you get this figure from, or are you just dumping random nunbers? The units are already furnished. The problem with the Baptist convention was the a/c died. You just send pay a mechanic to repair the rooftop a/c or replace the unit altogether. I don't see that costing anywhere in the millions.