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Indianapolis Area Hotels Facing Foreclosure;
Hurt by Economic Downturn & Bad Reviews

By Jeff Swiatek, The Indianapolis StarMcClatchy-Tribune Regional News

July 02, 2010--One of Anderson's largest hotels, with 157 rooms, the former Clarion Inn is for sale and facing foreclosure.

It's hardly the outcome that four partners had in mind when they bought the hotel just off I-69 in 2005.

"It's very disappointing," said general manager Vipul Modi, whose father is one of the owners of the hotel, which recently dropped the Clarion brand and was renamed the Garden Hotel. "We were hoping to turn this property around and do well. Instead we had to keep cutting the spending. The revenue has been on the decline."

The economic downturn of the past three years has dealt harshly with many hotels, lowering their occupancies, forcing constant cost-cutting, and making foreclosures and bank takeovers common.

Among other foreclosure actions filed against local hotels recently are cases against Ramada Conference Center South, at U.S. 31 South and I-465, and the Knights Inn in Shelbyville.

The three hotels, longtime fixtures in their markets, contain a total of 423 rooms.

The Knights Inn, one of the oldest franchised hotels in Shelbyville, was closed in late April by Shelbyville city officials for health and safety reasons. It reopened a month later under a new manager who's trying to turn the hotel around.

Older hotels with outdated features and smaller hotels off the beaten track are more vulnerable to getting into a financial bind during tough economic times like these, said Michael Conner, past chairman of the Indiana Hotel & Lodging Association.

Like all hotels, they also are affected by website ratings. The Far-Southside Ramada, the Shelbyville Knights Inn and the former Clarion in Anderson all have low ratings by customers on some popular websites that rate hotels, such as tripadvisor.com.

"Worst hotel EVER," proclaims the first review posted on tripadvisor about the Clarion.

Many people check hotel-rating websites before they book a room, so avoiding negative reviews is important to hotels struggling to boost occupancy, said Conner, who is regional general manager of the Hilton Garden Inn near I-465 and West 71st Street.

"They're definitely influential," he said of the hotel-rating websites. "If you get a lot of negative reviews, you better be turning things around or you'll be out of business."

Modi said his Anderson hotel also was hurt by the loss of Anderson's General Motors auto facilities, which employed 25,000 people in the 1980s and generated countless visitors to the city who used hotels.

Modi said his hotel has cut its staff from 40 to 20 since 2005.

A lawsuit filed in federal court in Indianapolis against the Anderson hotel by New York Mellon Trust Co. says the hotel's owners defaulted on a $1.9 million loan last year.

Modi said the four partners also invested $1 million of their own money in the Anderson hotel. They hope to arrange its sale at a price that lets them get their $1 million back, he said.

The Ramada's owner, G&G Hotel Development of Shelbyville, was sued by United Central Bank of Garland, Texas, for defaulting on a $4.7 million loan for the hotel built in 1962. Its partners, Gurmeet Singh Gill, Indianapolis, and Gurinderjit Singh Purewal, Olympia, Wash., didn't return a call for comment.

G&G, Gill and Purewal also are listed as owners of the 96-room Knights Inn in Shelbyville, which defaulted on a $5.4 million note held by United Central.

David Toney, a veteran hotel operator, was hired in April to try to turn around the Knights Inn.

He said he's begun posting positive comments left on guest comment cards on tripadvisor.com and has given his cleaning staff business cards imprinted with their names to leave in rooms, so customers know who cleaned the room.

"That's how you get yourself out of financial trouble. It all goes back to basics."

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To see more of the Indianapolis Star or to subscribe to the newspaper, go to http://www.indystar.com/.

Copyright (c) 2010, The Indianapolis Star

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