Dec. 20, 2010--A foreclosure auction failed to attract a buyer Monday for Santa Rosa's Courtyard by Marriott, but the hotel's operator said the property will remain open and undergo a major renovation.

The hotel reverted back to its lender, RBS Financial Products, when no buyer stepped forward at an auction in Petaluma.

Business went on as usual Monday at the five-story hotel near Railroad Square, said Mark LaBlanc of Rim Hospitality. The Newport Beach company has been the hotel's court-appointed receiver and will stay on to manage it for RBS.

The result of the auction takes the property out of "legal limbo" and adds some stability for hotel staff, LeBlanc said. Workers know the lender plans to spend about $2 million to improve the property in the coming months and "they now know we're staying, too."

RBS will eventually sell the hotel, but the lender plans to wait until the economy improves, he said.

The 138-room hotel opened in 1989 as a Days Inn and was converted to a Marriott a decade later. Windsor Capital Group, a hotel investment group in Santa Monica, purchased the hotel in 2005.

Earlier this year Windsor Capital defaulted on a $51.3 million loan on the Santa Rosa hotel and four others in California. The debt since has grown to $56.7 million. According to its president, Windsor Capital was a minority partner in the hotel group, while an investment arm of Credit Suisse held the largest stake.

At the end of September, Sonoma County had six hotels owned by lenders and another 13 in default, according to a survey by Atlas Hospitality.

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