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Vision Hospitality Group Inc. Acquires Downtown Chattanooga's Clarion Hotel
 for $7 million, Plans to Put Another $7 million in Renovation
 and Rebranding to Doubletree
By Bob Gary Jr., Chattanooga Times/Free Press, Tenn.
Knight Ridder/Tribune Business News

Apr. 23, 2006 - For Mitch Patel, the decision to buy downtown Chattanooga's Clarion hotel hinged on the front door.

The 34-year-old lodging is on Chestnut Street, but the main entrance is on one side, facing the 401 Building next door. Mr. Patel, president and CEO of Vision Hospitality Group Inc., said that layout didn't do much for him.

"We felt the hotel needed a better sense of arrival," he said. "When I realized we could move the lobby and redirect the whole sense of arrival to Chestnut, I knew it could be a wonderful hotel."

Mr. Patel felt so strongly that Vision bought the Clarion with an eye toward turning it into a Doubletree hotel. He said Vision paid Atlanta-based Atlantic Realty Partners Inc. $7 million for the property and plans to put at least that much into "massive" renovations.

"It could be $17 million by the time it's all said and done," he said, adding that work is set to start this fall and scheduled for completion by mid-2007. "We're basically buying the box (building) and the land," Mr. Patel said. "The lobby will be two stories. The rooms will be stripped to the bare walls and made very upscale, with plasma TVs. The bathrooms will be completely redone.

"It's going to be a very nice hotel when we're done with it," he said.

Steve Morse, director of the University of Tennessee's Tourism Institute, said the fact that Hilton is introducing its upscale Doubletree brand in Chattanooga bodes well for the downtown lodging market.

"I think it's a very strong signal that the downtown Chattanooga market will be viable and has the kind of growth potential to support that Doubletree in the future," Dr. Morse said.

But Tom Pugh, general manager of the downtown Marriott, said some of that support will come at the expense of the hotels that will be the Doubletree's primary competitors -- the Marriott, The Chattanoogan and the Sheraton Read House.

"The Clarion's probably not running the occupancy a new Doubletree will," he said. "We could lose business to the Doubletree we wouldn't have lost to the Clarion, but the good news is that because it's an existing property, the impact will be nominal."

But Brad Garner, an industry analyst for Hendersonville, Tenn.-based Smith Travel Research, said the Doubletree will eventually be a boon for its neighbors in that it will boost average daily rates across the market.

"(That happens) when you get properties like this, catering to the upper end of the market," he said.

"A rising tide lifts all boats, and the perception of most customers is that newer is better. If someone's going in and buying old product, it gets some obsolescence out of the market," he said.

Bill Mish, Vision's director of regional operations and the Clarion/Doubletree's general manager, said the Clarion's "low $70s" average daily rate will go up by $20 to $30 per day at the Doubletree.

"Certainly, the facility will warrant a higher rate, similar to other corporate group hotels in town, when the renovation's complete," said Mr. Mish, who preceded Mr. Pugh as president of the Greater Chattanooga Lodging Association.

Mr. Patel, whose company employs 325 workers and posted gross sales of more than $20 million last year, said he'd looked at the Clarion for a while.

"We kicked the tires numerous times, but it was never something we felt comfortable with," he said.

"We were used to building new hotels, and this was a dated hotel that needed a lot of work. It wasn't what had been successful for us," he said.

But Mr. Patel said the growth of the market, as well as the potential to move the Clarion's entrance by 90 degrees, finally convinced him and the Vision braintrust to pull the trigger in December. He said it was easy to get Hilton on board, given that half of the 12 hotels Vision owns are Hilton-brand properties.

"They believe in our company," Mr. Patel said. "We decided that if we were going to tackle something like this, we wanted to do it in our backyard, where we have great employees and an established infrastructure," he said.


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