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Marriott Drops Negotiations for the 966-room Adam's Mark, Jacksonville's
 Largest Hotel; Not Likely HBE Will Take Property Off the Market
By Christopher Calnan, The Florida Times-Union, Jacksonville
Knight Ridder/Tribune Business News

July 9, 2004 - Hilton, Hyatt and Westin hotels are the three strongest full-service prospects to buy the downtown Adam's Mark since Marriott International Inc. dropped out of discussions, industry analysts said Thursday. But while all three have looked at the property in recent months, none seem interested so far.

But Hilton said Thursday it isn't considering the Adam's Mark. Starwood Hotels and Resorts Worldwide Inc., which owns the Westin brand, is already considering another downtown location for a hotel.

"At the prices they charge at the Adam's Mark, it almost needs to be a Hyatt, Westin or Marriott," said Gary Andreas, a principal in St. Louis-based hospitality industry consultancy Tellatin Andreas & Short. "Those would be the alternate brands to a Marriott."

And Hyatt, one industry observer said, has already "discounted" buying the hotel.

Marriott spokesman John Wolf said Thursday his company is no longer negotiating for the 966-room Adam's Mark, Jacksonville's largest hotel. Talks stalled after the city refused a request from Marriott and a private investment group for an $8 million loan to buy and renovate the hotel.

The group told the city if it didn't get the loan it would kill the deal. Wolf declined further comment on the issue Thursday.

"We don't discuss ongoing or past negotiations," he said.

Susan Wiles, Mayor John Peyton's spokeswoman, said Peyton has placed a moratorium on incentive packages and the hotel received incentives when it was built.

"It's just not the right project at the right time," she said. "This project has already been incentivized by $21 million in public money."

Fred Kummer, owner of the hotel's parent company, St. Louis-based HBE Corp., has said he was selling the Jacksonville hotel for about $100 million. City records indicate that Kummer company invested more than $130 million in the hotel that opened in February 2001.

Kummer didn't return telephone messages seeking comment Thursday.

The Adam's Mark is scheduled to be the National Football League's headquarters during next year's Super Bowl.

Marriott and the private investment group offered to buy the hotel for $97.1 million, according to city records. The group and Marriott also planned to spend about $18.5 million on renovations and other related costs.

The city's loan would have been paid back, plus 5 percent annual interest, through a 2 percent increase in the hotel's room surcharge.

Kitty Ratcliffe, president of the Jacksonville & the Beaches Convention and Visitors Bureau, said Hilton, Hyatt and Starwood have all looked at the Adam's Mark property. Hyatt rejected it, but "that was months and months ago," Ratcliffe said.

Market conditions have changed since then, so the hotels may reconsider earlier decisions, she said.

Hilton spokeswoman Kathy Shepard said Hilton hasn't been acquiring hotels lately, and the company isn't looking to buy the Adam's Mark.

Ratcliffe said the hotel's existing management has been trained and is capable of operating the hotel during the upcoming Super Bowl.

"That has not been of grave concern to me," she said.

Jacksonville Super Bowl Host Committee spokeswoman Heather Surface said ownership changes at the Adam's Mark would be a non-issue because agreements with the hotel would be transferred to any new owner.

Peter Ricci, assistant professor of lodging management at the University of Central Florida's Rosen College of Hospitality Management, agreed that Hilton and Westin would be strong prospects for the Adam's Mark purchase. He also added Crowne Plaza and Radisson to the mix.

"Hilton and Westin are real natural matches," Ricci said. "They have more similar products that appeal to the group meeting market."

In addition to Westin hotels, Starwood owns hotel brands including St. Regis, The Luxury Collection, Sheraton, W and Four Points by Sheraton.

It's improbable that HBE would pull the property off the market after the Marriott deal fell through, Andreas said.

"They're selling off their hotels, and everyone in the industry realizes that," he said. "I think at this point they're past the point of no return."

The Adam's Mark was initially expected to cost $120 million to build. As of Dec. 31, 2003, its owners had made a $130.6 million investment in the project, according to the Jacksonville Economic Development Commission.

-----To see more of The Florida Times-Union -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.jacksonville.com.

(c) 2004, The Florida Times-Union, Jacksonville, Fla. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. HLT, HOT, MAR,

 
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