Mar. 13--For a company committed to cautious growth in the hotel industry, the inventory is changing quickly at Northwest Hospitality Group. 

Northwest has added less than one hotel a year since its inception in 1996, currently owning four hotels, including Homewood Suites in Vancouver, worth a total of about $40 million. 

One of those, the Alderwood Inn in Portland, came in February. 

Rick Takach, Northwest's president, said the company is negotiating to buy Staybridge Suites in Portland and working on a deal to manage five additional hotels in four states. 

If all the deals go through, the company will go from owning four hotels, described as lower-upscale to resort properties, to ownership of five properties within a few months. The company also will double its property management portfolio from five to 10, with future ownership implications as well. 

All of this is occurring while the hotel industry is riding out a tough market. 

Occupancy rates dropped to 60.3 percent nationally in 2001, according to Smith Travel Research, a Henderson, Tenn., travel industry research firm. That compares with 63.7 percent in 2000. 

Pricewaterhouse Coopers, a New York City company that analyzes the industry, reported late payments on lodging loans increased about 41 percent between August and October, a possible sign of future loan delinquencies. The company also reports revenue per room was down in 2001 and predicts those numbers will drop again in 2002, showing no increase until 2003. 

Takach, who would not reveal his company's revenues, said that even so, Northwest's hotels are doing better against competitors: "We have our good months, and our market share is a lot higher than it used to be, but our net profits are a lot lower" (because the economy is soft). 

Still, Northwest is benefiting to some degree from factors that are making hotel real estate more of a buyer's market. 

Northwest made an offer on the Alderwood 2 1/2 years ago that was rejected, said Takach. That worked out to Northwest's advantage, because the earlier offer was higher. 

Takach said a lot of people got into the hotel business while the economy was stirring, but some of those people didn't have the know-how to keep their businesses profitable as times got lean. 

"They either get tired of feeding it or they run out of cash," Takach said from his office on the ground floor of Vancouver Homewood Suites. 

The same conditions making it tough for hotel owners are hurting would-be buyers. Lending is tight, Takach said, requiring more equity per property. 

Northwest, he said, is in no hurry to buy up properties just because they look like bargains. 

"The prices aren't where I'd like to see them be," Takach said. "We've had slower growth than a lot of companies because we've been selective about our opportunities." 

The company's focus is two-fold -- ownership and management. Every hotel is its own business entity, with Northwest's owners each holding a percentage. 

Northwest Hospitality Group itself is primarily a management company. Takach said a hotel's success rides on how it's managed. 

Northwest's ability to hold on to management contracts, such as the one the company received from the Marriott franchise Northwest owns in McAllen, Texas, rests on its ability to hire competent staff. 

Each potential employee gets a minimum of two interviews, even those seeking positions in housekeeping, he said. Takach checks references himself, including references potential employees don't provide. 

In the case of the Alderwood, Northwest had the opportunity of managing it before buying it. 

Northwest also is close to signing a deal to manage hotels in Savannah, Ga.; Nashville, Tenn.; Las Cruces, N.M., and two in El Dorado, Ark. That contract will give Northwest the first right to purchase the properties. 

Managing before buying is an unusual situation, one Takach would like to have every time. "If I have a chance to manage them before buying them, it gives me a chance to know how they really are," he said. 

That kind of caution didn't come easy for Takach when the company was created. Northwest got its start when Realvest Corp. founder Paul Christensen and Vancouver developer Greg Daniels partnered with Takach and John Turner, a hotel developer from Louisiana. 

Takach had just completed a seven-year stint working for Turner, having parlayed an executive position into an ownership interest in several of Turner's hotels. 

The foursome created Northwest Hospitality to purchase and reopen the former Multnomah Hotel in downtown Portland and to develop the Vancouver Homewood Suites property. 

While Takach brought hotel management experience, the others brought business experience that helped rein in some of Takach's desire to bring on a portfolio of properties quickly. 

"They have helped me make the right decisions about growing the company without breaking it," Takach said. 

During its five-year existence, the company also had a one-year management contract with the Holiday Inn Express in Vancouver and a development consultant contract with Homewood Suites Hotel in downtown Seattle. 

Eventually, Takach said, Northwest would like to have an inventory of 15 and 20 hotels. 

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(c) 2002, The Columbian, Vancouver, Wash. Distributed by Knight Ridder/Tribune Business News.