News for the Hospitality Executive
|By Christopher Hinz, Reading Eagle, Pa.
Knight Ridder/Tribune Business News
Mar. 3, 2004 - A long-rumored franchise deal between the Lincoln Plaza Hotel & Conference Center at Fifth and Washington streets and Dallas-based upscale hotel chain Wyndham International Inc. is nearing completion.
The hotel is owned by John B. Rosenthal and Richard Barnhart of Philadelphia-based Pennrose Properties.
Rosenthal said Tuesday that a new subsidiary corporation, Kingston Partners, would be created to own the hotel, which would be renamed the Wyndham Reading.
Rosenthal said he expected the deal to be signed within two weeks.
"All the business terms have been negotiated," he said.
He said the hotel would pay Wyndham a franchise fee plus an annual fee based on revenues.
"We intend to give it a whole new fresh makeover," he said, referring to the hotel. "We'll be spending a minimum of $750,000."
Rosenthal said he hoped the national reservation and referral systems of the Wyndham chain would improve the hotel's low occupancy rates.
Those low rates caused Rosenthal and Barnhart to initiate a convoluted legal maneuver that in January led to their purchasing the hotel from other corporations they controlled for $7,200 at a sheriff's sale.
The deal wiped out the hotel's debt, including the remainder of a $2.25 million city-guaranteed federal loan.
"We didn't take a penny out of this thing," Rosenthal said. "We've lost over $3 million in cash."
The loan deal, including interest payments and other funding the city provided to the hotel, is expected to cost the city $14.1 million.
Mayor Tom McMahon, who took office in January, said it was unfortunate the city entered into such a deal years ago.
"That's something we've definitely learned from going forward," McMahon said Tuesday.
McMahon said the name recognition of the Wyndham banner should help the hotel achieve success.
Rosenthal said the only part of the hotel that had performed well was the seven floors devoted to senior housing.
The Lincoln has several enterprises -- the 104-room hotel on floors 10 through 18, a Kansas City Steakhouse restaurant, meeting rooms, a ballroom, commercial space and the senior housing apartments.
A 300-space parking garage connected to the hotel is owned and managed by the Reading Parking Authority.
Rumors of a franchise agreement with Wyndham surfaced last summer when incorrect name-change instructions by a sales representative with Inns of Distinction, the Chadds Ford company that manages the Lincoln, caused the Reading and Berks County Visitors Bureau to begin promoting the Lincoln under the Wyndham banner.
Rosenthal said he intended to have Inns of Distinction continue to manage the hotel under the Wyndham franchise, adding that he felt strongly about helping to rebuild Reading.
"We bought this to work," he said.
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(c) 2004, Reading Eagle, Pa. Distributed by Knight Ridder/Tribune Business News. WBR,