News for the Hospitality Executive
|By Michael Kinsman, The San Diego Union-Tribune
Knight Ridder/Tribune Business News
Dec. 4, 2003 - The storied U.S. Grant Hotel has been purchased for $45 million by the Sycuan Band of Kumeyaay Indians, which hopes the downtown hotel will help diversify the tribe's economic base.
The transaction was completed at midnight Tuesday, with Sycuan taking over yesterday morning from Wyndham International, a Dallas company that paid $29 million for the property 2 years ago.
"We are tremendously proud to be able to purchase the U.S. Grant, which has a historical role in San Diego," Sycuan tribal chairman Daniel Tucker said. "We see this as another step in our diversification."
The tribe has a special reverence for the hotel's namesake, Ulysses S. Grant, who as U.S. president signed an executive order in 1875 setting aside lands in San Diego County exclusively for the Kumeyaay, including the Sycuan reservation in East County.
"We feel the hotel is a part of history, and we are part of that history, too," Tucker said.
The 170-member tribe also said it would spend an additional $10 million to renovate the 93-year-old hotel.
The stately hotel, directly across Broadway from Horton Plaza, has 284 rooms and a five-story parking garage.
The hotel has struggled for more than two decades with a succession of owners and operators trying to restore it to profitability. The hotel's occupancy rate is believed to be low for the downtown area.
Sycuan has been a leader among California Indian tribes in aggressively expanding business operations beyond its 900-acre reservation southeast of El Cajon, where it operates a successful gambling business.
In 2000, it purchased Singing Hills Country Club and a 104-room hotel three miles from the reservation. Last August, it proposed a $25 million hotel, restaurant and market near the National City waterfront. Last month the tribe launched a mutual fund to invest in stocks of large and medium-sized American companies.
The tribe had tried to acquire the naming rights to the Padres' new downtown ballpark, but that idea was rejected by Major League Baseball. Petco later purchased the naming rights for $60 million.
"All of these things help us diversify," Tucker said. "The casino is part of what we are, but we also have to do more for the economic security of future generations."
He said the tribe has no interest in trying to house a casino or other gaming operation at the hotel, but that a museum will be incorporated into the lobby of the hotel to celebrate the history of the Sycuan tribe.
The downtown hotel has a colorful history. The son of famous Civil War general and President Ulysses S. Grant acquired the Horton House in 1895, razing it 10 years later. Financial setbacks delayed the hotel's opening until fall 1910.
Through the years, the hotel played host to presidents such as Warren G.
Harding and John F. Kennedy and assorted VIPs, such as columnist Walter Winchell and actor Clark Gable.
In 1948, a group of NAACP activists descended upon the hotel and demanded an end to segregation, and in 1969, a group of eight women protested the Grant Grill restaurant's men-only policy.
American Properties Management Corp. of San Diego will manage hotel operations, Sycuan said. The company manages 36 other hotels with more than 9,000 rooms.
The U.S. Grant's fortunes have been up and down through the years. In the 1970s, the hotel fell into disrepair and seemed destined to be demolished.
Developer Christopher Sickels invested nearly $90 million to restore the hotel's luster in the mid-1980s. But the debt burden of Sickels' renovation proved too much. He lost control of the hotel to his investors, and it was sold to a Japanese company in 1989.
Robert Rauch, director of San Diego State University's Center for Hospitality & Tourism Research, said the hotel is in need of refurbishment.
"Hotels get tired and the U.S. Grant has been tired for a long time, more than 10 years," Rauch said. "It's got the bones of a good hotel, but it needs the look of a good hotel. It's going to take a lot to accomplish that."
Tucker said Sycuan is committed to that. He said the renovation should be completed within a year and the tribe hopes the hotel will be flagged as part of the Starwood Luxury Hotel Collection. Starwood, which operates the Sheraton, Westin and W hotel chains, would draw from an extensive base of upscale customers that would help the U.S. Grant increase room rates.
"If you look at this deal based on past performance, Sycuan paid a lot for the hotel," said Jerry Morrison, a hotel analyst with Morrison & Co. in La Jolla. "But if you look at it as a member of the Starwood Collection and what the hotel can be, it could be a very good deal. We don't really have any kind of small, luxury hotel like this is envisioned."
Morrison said he believes Sycuan needs to upgrade the 33,000 square feet of meeting space at the hotel. The meeting space has low ceilings, creating a claustrophobic effect on large groups and is undesirable for group meetings, he said. That improvement could be accomplished by reviving a previous plan to build a 17-story tower above the parking garage on the north side of the property.
Tuckersaid that Sycuan has no immediate plans to construct the tower.
"We might in a couple of years, but we want to get this hotel working smoothly before we do anything like that," he said.
Some experts still see the hotel's Third Avenue and Broadway location as a stumbling block.
"The location is a second-tier location compared to those hotels that are on the waterfront," Rauch said. "If you look at the hotels on the Broadway corridor, all of them are struggling when you compare them to the waterfront hotels or Gaslamp hotels within walking distance of the Convention Center."
--Staff writer Roger M. Showley contributed to this report.
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(c) 2003, The San Diego Union-Tribune. Distributed by Knight Ridder/Tribune Business News. WBR, PETC,
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