|By Tony Reid, Herald & Review,
Decatur, Ill.McClatchy-Tribune Regional News
Jul. 29, 2007 - DECATUR -- Bidders getting ready to fight it out at auction for the Decatur Conference Center and Hotel know what they are getting in excruciating detail.
The hotel is being sold Aug. 16 as a going concern, and the bidder's information packet lists everything that will go right along with it, even down to the number of butter warmer stands (21) and the number of dinner forks (2,240), which, perhaps disconcertingly, doesn't match the number of dinner knives (1,400).
The hotel's finances also are laid bare in precise numbers. Figures for the quarter ending April 30 show a profit of $164,676, but that was less than half the budgeted figure of $331,181. In 2006, the hotel turned in a full year profit of $237,311, compared to a loss for 2005 of more than $400,000.
Auctioneer Rick Levin of Chicago-based Rick Levin & Associates Inc. describes the financials as "disappointing" but says that is not the point. He believes buyers number-crunching the data and wading through totals of silverware and bed linens are looking to the future, not the past.
These bidders have to make educated guesses on what profit could be wrung from the hotel's 370 rooms and 21 suites in the years ahead, given the right business model and personnel to make it happen.
"You are not going to buy this on the current financials," Levin said. "You are going to buy it on the upside potential and if you believe you can make a go of the convention business and the lodging business."
The price is likely to be attractive for bidders rich enough to qualify for a seat at the auction (you'll need to present a cashier's check for $250,000 to establish your bona fides). The hotel, listed in court documents as owned by Real Estate Investors of Decatur LLC, is being sold under court order after legal action was taken by Central Illinois Bank. The bank wants to recover more than $12 million it's owed on a mortgage, but the replacement value of the hotel -- the cost to build another just like it -- is estimated at $36 million.
"If you can buy a property for a lot less than it would cost to reproduce it, well, that could be a very good buy for someone," Levin said.
So far, he says, he's had buyers from all over the country and even from overseas taking an interest. The auctioneer says there is a lot of capital out there looking for something in which to invest, but not all the appraising eyes belong to the hotel business. Some would-be buyers have looked at the site's potential for other uses, with ideas ranging from retirement communities to some type of training center/campus for nonprofit organizations.
Business leaders in Decatur are keeping their silverware crossed and hoping no winning bidder checks in with any ideas like that, however. They say Decatur needs the hotel's rooms and its 55,000 square feet of convention space, the largest combination of rooms and meeting space in the downstate area.
There's a lot of tax money at stake, too. In addition to the more than $400,000 the hotel complex pumps into Macon County real estate tax coffers every year, the business provides a major source of income through a hotel/motel tax that supports the Decatur Area Convention and Visitors Bureau.
Denene Wilmeth, the bureau's executive director, didn't have exact figures at hand but said the loss of the business as a hotel would be devastating.
"The proceeds from the hotel/motel tax would be about cut in half if they close as a hotel," she said. "That is the income we need to fund promotional advertising and to go out and make bids to bring sporting events and other activities to this area."
Wilmeth says the hotel and convention business could be profitable and points to high demand from new special events such as the Farm Progress Show, which fills an estimated 7,000 hotel rooms in the Central Illinois area. Decatur also has just landed the 2008 Illinois Republican convention, estimated to bring in another 1,500 visitors.
"I would like to see -- and Decatur needs -- a full service hotel with convention center continuing to operate out there," said Randy Prince, president of the Greater Decatur Chamber of Commerce. "We really need the hotel rooms -- we desperately need those hotel rooms."
For Decatur Mayor Paul Osborne, who frequently steps into the role of the city's cheerleader-in-chief, having a major hotel on that side of Decatur signals the possibility of future developments. He still has hopes of one day seeing a water park near the hotel and said promotions like the Looking for Lincoln tourism campaign depend on hotel rooms and convention space.
"I really have thought a lot about the future of the city, and that hotel/convention complex will play a role with everything we are trying to do to attract tourists and bring more people to Decatur," Osborne said. "I can't think of anyone who looks at economic development in the city who would not want that to continue as a hotel and convention center."
Tony Reid can be reached at firstname.lastname@example.org or 421-7977.
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