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 Builder and Investor Mike Hollander Makes Mark
 with Hotels in Washington State

By John Gillie, The News Tribune, Tacoma, Wash.McClatchy-Tribune Regional News

October 11, 2009--

<>During the recession in the early 1990s, Bellingham builder and investor Mike Hollander spotted the half-finished hulk of what was to become Puyallup's Best Western Park Plaza Hotel.

The hotel's original developer had failed to complete the structure, and the bank that ended up owning the bare bones of a suburban hotel was willing to deal.

Hollander bought it and finished the inside in a grand style – a three-story lobby, a baronial fireplace and a massive brass chandelier that was much more upscale than the hotel's already finished vanilla exterior.

The saga of Puyallup's Best Western Park Plaza exemplifies Hollander's keen sense of timing and his willingness to take a risk where other hotel developers have failed or shied away.

• Hollander bought a struggling Portland hotel near that city's convention center in 2003 when tourism was still down after the 2001 terrorist attacks.

• Hollander bought and updated Bellingham's tallest building, the 15-story 1929-vintage Bellingham Towers, in 1997 and filled it with new office tenants.

• Hollander Investments built the Marriott Courtyard Hotel on Pacific Avenue adjacent to the then-new Greater Tacoma Convention & Trade Center after other developers bowed out.

"The best times to build are the times when the business has hit the bottom and is on the way up again," said Chuck Valley, a vice president of Hollander Investments and the general manager of the Best Western Park Plaza. "The Hollanders as a private ownership have the opportunity to take advantage of those opportunities, and they have methodically and successfully done so for years."

This contrarian business philosophy is still playing out in Pierce County.

Neither Mike Hollander or his son and business partner, Mark, could be reached for comment on this story. But in 2003, speaking about the work the family-owned company did on downtown Tacoma's Marriott hotel and renovation of the historic Waddell building, Mike Hollander described his initial wariness about that project.

His chief of operations "said we need to look at going downtown," Hollander said then. "I used to think of it as the armpit of America."

But at the unveiling of the restored Waddell, Hollander said, "It is refreshing to work with a city that wants to make things happen."

NEW HOTELS AND MAKEOVERS

Now, during a recession unprecedented since the Depression, Hollander Investments Inc. is planning two new Pierce County hotels and has scheduled major remodeling for two others, the Best Western Park Plaza and the nearby Holiday Inn Express, both in Puyallup.

One of those new hotels will be part of a mixed-use complex near Puyallup's expanded Good Samaritan Hospital. That Fairfield Inn, a 115-room, six-story structure, is scheduled to begin construction next spring on 15th Avenue Southwest. And if there's demand, an office building also might be built on the property.

Meanwhile in Tacoma, Mark Hollander is proposing a three-phase development for a site on downtown Tacoma's Thea Foss Waterway. That development, if Hollander can navigate the political issues that surround it, would begin with a Marriott Residence Inn and then expand to include a second hotel and finally an office structure linking the two hotels.

COMMITTED

Hollander's business philosophy is not without risk, said J.J. McCament, a former Tacoma economic development manager who helped attract new business to downtown. McCament, now a real estate consultant, counts Hollander Investments as one of her clients.

"I remember that when he was considering whether to build a hotel downtown, Mike came down here and watched the drug selling that was then happening on that block," McCament said. "He made the commitment anyway, and the project turned out well," she said.

On the Foss where Hollander is proposing the company's second downtown hotel, two other developers have failed to get a hotel built despite nearly six years of trying.

Now Hollander, with financing in hand, plans to buy the hotel site on the west side of the Foss on Dock Street from a group led by Seattle hotelier Robert Thurston. The Foss Waterway Development Authority, charged by the city with reviving the formerly industrial arm of Commencement Bay, is backing the Hollander plan, but the Tacoma City Council is reluctant to give Hollander the go-ahead.

FORGING AHEAD

The council is holding up approval of an otherwise routine environmental indemnity agreement in part because some council members are unhappy that the Hollander hotel won't be as upscale as the hotels that Thurston had proposed for the waterfront site.

Don Meyer, the Foss authority's director, said a handful of developers expressed interest in the Thurston group's site, but only Hollander said he was prepared to proceed with construction even if downtown Tacoma's biggest employer, Russell Investments, moved its headquarters to Seattle.

Russell announced last month that it would move its 900 staffers to the former Washington Mutual headquarters building.

"A lot of developers bring big dreams with them, but only Hollander had the financial commitment to make it go," Meyer said.

Hollander and Thurston are now pondering whether they can bypass the council by transferring an existing environmental agreement between the city and Thurston to Hollander.

The deal must be done soon because the shoreline permits for the Foss Hotel expire after March if construction has not begun by then. Before construction can begin, planning for the hotel must pass further review by the Foss Authority board, and the city must review plans and issue building permits.

HIGH EXPECTATIONS

During the recent political machinations on the City Council, concerns about the design of the potential Foss Hotel also came up. Not everyone is a fan of the look of the Pacific Avenue Marriott.

In July, Hollander's plans for mid-range properties drew a caution from former Foss board member Frank Jacobs, himself a former developer and former head of the authority's design review committee. Jacobs reminded authority board members that the authority had envisioned a boutique hotel on the property – a smaller upscale establishment that would make best use of the rare waterfront site.

The authority shouldn't rush in drawing up a new development agreement because it could regret its hasty decisions for up to 100 years, he said.

Another developer who owns property on the Foss agrees that a mid-range hotel isn't the right fit.

"We need world-class development on this waterfront," Albers Mill owner Grace Pleasants said Friday. Albers Mill was one of the first developments to happen as the city tried to remake the waterway.

"The City of Tacoma spent $200 million of federal money on a world-class waterfront," Pleasants said, "and we need to maintain it."

PLUSH IN PUYALLUP

The political machinations in Tacoma aren't deterring Hollander's plans in Puyallup, said Best Western Park Plaza manager Valley.

A million dollars worth of interior and exterior remodeling will begin in December on the Holiday Inn Express, he said.

Already a prototype room at that hotel shows how the 11-year-old, 96-room property will be brought up to 21st-century standards. That room features trendy new furnishings and carpet and a pedestal-style stone countertop in the bathrooms. The beds will be triple-sheeted with high-end-looking linens, and the TVs will be flat screens. The lobby furnishings and fireplace will be updated.

The hotel plans to use the wintertime to close one floor at a time for a makeover, said Valley.

Meanwhile, Seattle architect Dave Murphy is working on plans for the Fairfield Inn near Good Sam. The six-story, 115-room hotel will be a significant departure from the stock designs for Fairfield Inns, said Murphy.

The new property is expected to attract business both from the much-expanded Good Samaritan Hospital and the nearby Puyallup Fair & Events Center, a venue that is becoming a year-round attraction for shows, exhibits and meetings, said Valley.

Mark Hollander has said the hotel is expected to cost between $10 million and $12 million.

Construction of an additional 40-room tower at the Best Western Park Plaza should begin sometime in the fall of 2010, said Valley.

WHY NOW?

Hollander Investments is embarking on an aggressive and expensive building and remodeling campaign as hotel occupancy rates are down.

Through July, the occupancy rate in Pierce County hotels was down 9.3 percent to 63.7 percent, according to hotel consultant Wolfgang Rood. But rates held relatively steady at a $78.34 average for Pierce County rooms.

Statewide, the losses were somewhat wider with a drop of 9.6 percent to 64.4 percent in occupancy. Statewide, room rates fell 7.8 percent to $118.43 a night, according to Rood.

Chuck Valley, a vice president for Hollander Investments, said an economic downturn can provide opportunities unavailable in headier times.

Good hotel sites are available for reasonable prices. Construction costs are down and competition for contracts is up, and for those who have the financial underpinning to pull off the deals, financing rates are low.


OTHER PLANS FOR PUYALLUP

Hollander Investments' hotel portfolio dots the South Sound. And Hollander isn't the only company interested in Puyallup as a hotel site – two other hotels are on the drawing board for the city.

• A proposed Liberty Inn would occupy a site across 14th Avenue Southwest from Costco. Initial plans called for a 100-room property, but the developer, Aliza Inc., is reportedly studying new configurations. The developer bought the land from Costco, but still has not decided when, or if, it will begin building, said a company spokesman. Aliza owns two other Liberty Inns, one in DuPont and the other in Lincoln City, Ore.

• A Hampton Inn is being considered for a plot near Good Samaritan Hospital. Developers have been mulling over the prospect of building the hotel for nearly two years. Their initial proposal remains active with the City of Puyallup, said Dan Voelpel, the city's economic development director.



John Gillie, The News Tribune

Staff writer Kathleen Cooper contributed to this report.

John Gillie: 253-597-8663

john.gillie@thenewstribune.com


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Copyright (c) 2009, The News Tribune, Tacoma, Wash.

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