May 12, 2004 - A Scottsdale-based luxury condominium developer is buying the Radisson Resort & Spa in Scottsdale.

The deal, which would transfer ownership of the 318-room hotel at 7171 N. Scottsdale Road to Starpointe Properties, is expected to be finalized within weeks, said Melissa Thompson, spokeswoman for Interstate Hotels & Resorts, which manages and partially owns the Radisson.

Starpointe also is buying the Holiday Inn SunSpree, a 200-room inn less than a mile away. That purchase is expected to be completed in July.

The SunSpree has received City Council zoning approval to be razed and rebuilt as a condominium complex. Radisson general manager Matt Kinley said he doesn't know whether Starpointe plans to run the Radisson as a resort or turn it into condos.

"They have not shared plans with us," he said.

Starpointe founder and partner Robert Lyles said both purchase agreements include confidentiality clauses, so he is not able to disclose plans for either hotel while contracts are pending.

Since Starpointe is the largest condo developer in Arizona and the company specializes in high-end, in-fill projects, it's reasonable to expect that both hotels will eventually become upscale residences.

Starpointe, a 7-year-old condominium development company, owns 13 current or under-development communities, most of them in Scottsdale and the south East Valley, plus the 27-hole Starfire Country Club in Scottsdale. Starpointe bought Starfire -- then dubbed Scottsdale Country Club -- in 2000, revitalized the course and built a clubhouse and 174 golf-view condos on the property. Starpointe's other developments include the 234-unit Bridges at Ocotillo in Chandler, the 134-unit Superstition Lakes community in Mesa, the 220-unit Meridian complex in the Biltmore Estates in Phoenix, and the 164-unit Presidio at McCormick Ranch in Scottsdale.

"Demand for high-end condos is very strong in this area," Lyles said.

The Radisson Scottsdale is owned by MeriStar Investment Partners, an investment group that includes Interstate, MeriStar Hospitality Corp. and Oak Hill Capital Partners. Neither MeriStar or Starpointe would disclose the purchase price of the property. The Scottsdale resort, which had a succession of hotel brand names, was built in 1977.

The property plunged into bankruptcy in 1993, was rescued by the Resolution Trust Corp. and eventually bought by investment group Deerport Scottsdale. MeriStar Investment Partners bought the property in 1999 and spent $5 million to spruce it up. The Scottsdale Plaza Resort, the Radisson's across-the-street neighbor, made an unsolicited bid for the place in 2000, but the deal never materialized.

Since 2001, the economic downturn, business travel slowdown, terrorism fears and war have wounded tourism and hotel bottom lines nationwide. The tumbling tourism market and the availability of hotels at fire-sale prices have led to a flurry of hotel sales nationwide.

MeriStar recently unloaded two other Valley hotels -- the Crowne Plaza North Phoenix and the Sheraton Phoenix East-Mesa, which has recently shed its affiliation with Sheraton and is slated to become a Marriott this month.

Besides the Radisson and SunSpree potentially becoming condo complexes, a portion of the newly purchased Valley Ho in Scottsdale is being converted to condos. And owners of the Mountain Shadows Resort, which will lose its Marriott affiliation if it doesn't do an expensive and elaborate renovation, have approached the Paradise Valley Town Council about possibly rezoning the land for homes.

The conversion of some aging hotel properties to residences is a normal part of a typical real estate cycle and could be considered a boon for the community, said Bill Murney, senior vice president at CB Richard Ellis. Murney is an expert on the local hospitality industry.

"There has been a significant number of hotel rooms added to the downtown and north Scottsdale market," Murney said. "(SunSpree and Radisson) are older properties and would require significant investment to be competitive with the newer properties. It's an economic decision. Eventually the land becomes more valuable for other uses."

Reducing the number of hotel rooms competing for tourists and adding luxury condos in an in-fill area are good for a community's economic health, Murney said.

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