|By Barb Berggoetz, The Indianapolis Star|
Knight Ridder/Tribune Business News
Sep. 10, 2004 - Indiana University plans to get into the hotel business on the IUPUI campus with a $31 million investment.
University trustees on Thursday took the first step to owning and operating the 278-room University Place Hotel on West Michigan Street.
"It's an important part of the campus," said Charles Bantz, chancellor of Indiana University-Purdue University Indianapolis. "It's been a big asset to Indianapolis, too."
Trustees voted to allow the IU Foundation to initially buy the hotel from University Development Group I, an investment firm, and lease it to IU.
IU then intends to buy the hotel next year from the foundation for $17.5 million and renovate the facility for about $12 million.
By buying the hotel, Bantz said, IU would bring together under one management its operation with the adjoining conference center -- a move that will help draw more conferences. The renovated facility will be needed, too, he said, for families and patients of the new cancer center to be built on campus beginning next spring.
The hotel's occupancy rate has declined in the past few years, falling to 55 percent in 2003. IU officials said the rooms haven't been renovated for more than eight years. They will receive new carpeting, furniture and fixtures. Also, the roof leaks and has caused some damage, so it will be replaced along with windows.
Renovation is due to begin early next year and be completed within eight months.
The university expects to sell $31 million in bonds to cover the purchase and renovation price, plus some contingency funds.
Before it can do that, though, IU needs to get the legislature to pass a bill permitting the university to sell the bonds. William Stephan, IU vice president for university relations, said he's hopeful the bill would win support in the 2004 session.
IU's move to take over operation of the hotel is not unusual.
"Most universities own a hotel," said Robert Martin, IUPUI's vice chancellor for administration. He cited IU's Memorial Union and a hotel owned by the University of Notre Dame.
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