Mar. 19, 2004 - The former Sheraton Hotel at Crabtree Valley Mall is about to get a $30 million makeover that will give Raleigh its first luxury hotel. 

Sanjay Mundra, chief executive of First American Hotels in Cary, and Dicky S. Walia, who operates Welcome Holdings in Raleigh, will announce today that they will open the hotel as a Westin franchise in the summer of 2005. 

In the months in between, the hotel will undergo a complete overhaul with the goal of earning a coveted four-diamond rating from the Automobile Association of America or a four-star rating from the Mobil Travel Guide. 

Today's announcement could touch off a race to be Raleigh's first four-diamond hotel. Quaintance-Weaver Restaurants and Hotels, which owns the O. Henry Hotel in Greensboro, is considering building a hotel just down Glenwood Avenue at the former Koger Office Center that could earn the distinction. John Kane, who is redeveloping the former North Hills Mall, also is negotiating with developers for a luxury hotel. 

And in Cary, Ann Goodnight, wife of SAS Institute co-founder Jim Goodnight, is planning a $70 million hotel that could qualify for five stars when finished. 

The only full-service Triangle hotels that now have a four-diamond rating are the Carolina Inn and the Siena Hotel in Chapel Hill and the Washington Duke Inn & Golf Club in Durham. The Fearrington House in Chatham County has a five-star rating as a country inn. 

"We live here, our families go to school here. Having the nicest hotel in town is important to us," Mundra said. 

The partners are planning amenities such as 42-inch plasma televisions, goose-down comforters and oversize bathrooms with separate tubs and walk-in shower stalls. 

Rooms also will be much larger than the Sheraton's. Originally the hotel had 315 rooms; the new hotel will have 225. Every three rooms will be combined to form two rooms, increasing the total space in each to 468 square feet. 

In addition, the partners plan a fitness spa, heated outdoor pool and shops. They also said they have a letter of intent from one of the country's top five restaurants but declined to name which one. The amenities won't come cheap. Room rates of $150 to $200 a night are anticipated. The average Wake County room rate last year was $65.49, according to the Greater Raleigh Convention and Visitors Bureau. 

"Westin wanted to make sure it was a four-diamond and signed up with us," Walia said. The Westin flag is a brand offered by Starwood Hotels and Resorts, based in White Plains, N.Y. The only other Westin in North Carolina is a 700-room hotel that opened last year in Charlotte. Nationally, there are 63 Westins. 

The renovation would be a remarkable turnaround for the old lodge that was the first Sheraton Hotel in North Carolina when it was built in 1973 by former Raleigh mayor Seby Jones. The hotel was the inn of choice for thousands of guests through the early 1990s. Jones, who died in 2002, even maintained a 3,000-square-foot condominium for himself atop the hotel. 

But upkeep waned, and the hotel was downgraded to a Four Points by Sheraton and later became a Clarion. Providian Life and Health Insurance, a division of Dutch insurer Aegon, closed the hotel in September as part of a foreclosure procedure, and the partners bought it for about $5 million. The former operator, Raleigh-based Davidson and Jones, had considered a $1.25 million renovation in 2002, but shelved those plans as the hotel industry suffered through overbuilding and sagging occupancy. 

Other hotel developers looked at the hotel but decided to pass. But Mundra and Walia determined that by demolishing all of the hotel except the supporting columns, the cost of building each room would be about $100,000. Building a new Westin from scratch would cost as much as $225,000 per room, they said. 

Mundra wants the building to be completed before any potential competition. In Raleigh, "the market is ready for one, but maybe not two," he said. Kane and Dennis Quaintance said the Westin at Crabtree won't affect their plans. 

Mundra and Walia have bought other distressed hotels. In 2001, Mundra's company bought a 200-room Holiday Inn in Fayetteville for $4 million, he said. In 1998, First American bought a Sheraton Grand hotel in New Bern for $8 million. 

The partners also own a Hilton Garden Inn in Hilton Head, S.C., a Holiday Inn on the Billy Graham Parkway in Charlotte, Hampton Inns in Henderson and Havelock, a Quality Inn in Lexington and a Microtel Inn & Suites in Raleigh. 

PLANNED HOTELS 

Four possible luxury hotels are being considered for the Triangle, with hopes of earning a rating of a four or five from Mobil or AAA. They are: 

-- The Westin at Crabtree Valley: A 225-room hotel with a heated outdoor pool and fitness spa. Rooms will have 42-inch plasma TVs, goose-down bedding and oversize baths. Room rates of $150 to $200 a night are expected. 

-- The Umstead: A 151-room hotel with a 12,000-square-foot spa at Cary's Arboretum. The hotel could cost as much as $70 million. 

-- An unnamed hotel: Quaintance-Weaver Restaurants and Hotels, owner of the O. Henry Hotel in Greensboro, is considering a $30 million hotel at the former Koger Office Center on Glenwood Avenue. 

-- An unnamed hotel: John Kane, who is redeveloping the former North Hills Mall at Six Forks Road and the Beltline, said he is in negotiations with developers for a luxury hotel at the site and will have an announcement in 90 days. 

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