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Procaccianti Group Considers Acquiring the 405-room Norfolk Waterside Marriott Hotel; Plans Include $8 million Renovation
By Harry Minium, The Virginian-Pilot, Norfolk, Va.
Knight Ridder/Tribune Business News 

Jul. 18, 2003 - NORFOLK, Va.--The Norfolk Waterside Marriott Hotel will be purchased by a Rhode Island company that plans an $8 million renovation of the 23-story downtown luxury hotel. 

Officials with Procaccianti Group of Cranston, R.I., declined comment, but earlier this week Assistant City Manager Nancy M. Johnson briefed the City Council on the sale of the 405-room hotel, which is to be finalized today. 

She said Procaccianti decided to renovate the 12-year-old hotel to retain the Marriott brand name. Marriott, a coveted franchise, said the renovations were necessary to keep the property at its standards. 

Moreover, she said Procaccianti officials have agreed to end the city's subsidy to the hotel for running the Waterside Convention Center, a city-owned facility that occupies the first three floors of the Marriott's ballroom area. 

The city has paid the hotel nearly $7 million in subsidies during the past 12 years to run the convention center, which cost $15 million to build. 

The subsidy was offered when the hotel opened because at the time few conventions were held downtown, and because convention centers generally lose money. 

"The subsidies have actually been less than what were projected at the time," City Attorney Bernard A. Pishko said. "The hotel industry downtown did better than anyone thought it would." 

In fact, after studying the Marriott's occupancy rates -- 78.2 percent in 2002 and a projected rate of 77.1 percent this year -- Johnson said officials "questioned whether or not it was truly necessary for the city to be subsidizing the convention center, or whether the hotel could be challenged to operate it more efficiently." 

When Procaccianti officials agreed to end the subsidy, they also received authority to cancel that deal if and when the city builds another convention center downtown, Johnson said. 

City officials say they are pleased that the Procaccianti Group is buying the hotel. The group also bought the 401-room Richmond Marriott last summer and owns the Sheraton Richmond Hotel. It is among the nation's top 50 hotel ownership groups. 

"This agreement is a win-win situation for both the city and the Procaccianti Group," Johnson said. 

No sales price was announced. The hotel was opened in 1991 by Stormont Trice, which sold it for $32.5 million in 1997 to Host Marriott Corp. Johnson said Procaccianti, as part of the deal for the Norfolk Marriott, agreed to also purchase two other hotels from Host Marriott she described as distressed properties. 

"They very much want to be in downtown Norfolk," she said. 

The City Council gave City Manager Regina V.K. Williams authority on Tuesday to negotiate a new lease on the convention center. Williams has proposed a 10-year deal, with four five-year renewal options. 

Johnson said only one item remains to be negotiated -- the fees the city charges for guest parking at the Waterside garage. 

Currently, the city charges $8 per space. The hotel, in return, charges guests between $17 and $22 for valet parking, Johnson said. 

Johnson said the city has agreed to spend at least $195,000 a year on maintenance to the convention center. The city was obligated to spend that much the past 12 years, but Johnson said it rarely did so. 

She said Procaccianti also agreed to make more rooms available at "reasonable rates" to the Norfolk Convention and Visitors Bureau for meetings and conventions. 

Anthony J. DiFilippo, the bureau's president and chief executive officer, said that will make it easier for his group to book large groups. 

"The original booking policy was made because there was no market at the time for conventions downtown," he said. 

"This should help us attract more groups." 

-----To see more of the The Virginian-Pilot, or to subscribe to the newspaper, go to http://www.pilotonline.com 

(c) 2003, The Virginian-Pilot, Norfolk, Va. Distributed by Knight Ridder/Tribune Business News. MAR, 


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