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Pittsburgh Hilton Owner Shubh Hotels LLC's Woes Keep Escalating;
Problems Not Limited to Pittsburgh Hotel

By Rick Stouffer, The Pittsburgh Tribune-ReviewMcClatchy-Tribune Regional News

June 25, 2009 -- Pittsburgh Hilton Hotel owner Shubh Hotels LLC's local woes keep escalating, and the company's money problems aren't limited to Pittsburgh.

On Wednesday, Mayor Luke Ravenstahl, with an eye on September's G-20 summit meeting here, was asked what the city can do to hasten the Hilton's renovations and whether the city can give hotel owners money.

"No, we will not give any money to the project," Ravenstahl said, adding that building inspectors will meet with hotel officials soon to review construction plans and building permits the city has granted.

Building inspectors may revoke the project's building permits if construction stops for six months, said Joanna Doven, Ravenstahl's spokeswoman.

"The world is going to be here, and there will be numerous projects under construction in September. Some will look better than others. It's just the nature of a city that's growing," Ravenstahl said. "I don't know that one building or one project is going to significantly hamper our ability to get that positive message out about Pittsburgh."

Yesterday, some of the Hilton's prestige evaporated when Pittsburgh Steelers spokesman Dave Lockett said that the National Football League team won't be using the hotel to bed its players and coaches the night before home games.

"The reason is we were given a better opportunity at the Omni William Penn," Lockett said. The Steelers have used the Hilton for 10 years, he said.

Efforts to reach Shubh executives weren't successful.

The Hilton's problems surfaced when, for the second time in 13 months, workers employed by P.J. Dick Co. walked off the job at a construction project at the Hilton because Shubh wasn't paying for work completed. Construction on the second phase of a $25 million renovation and expansion at the Hilton has been halted for seven of the last 13 months.

On Friday, Dick filed in Allegheny County Court of Common Pleas what's known as a mechanic's lien, used by companies that aren't paid for their work. Liens must be satisfied before a property owner can give clear title to a buyer. The West Mifflin-based prime contractor on the expansion said it is owed $317,273. The largest mechanic's lien of 17 filed within the last 18 months against Shubh concerning the Hilton was submitted by Comm Steel Inc. of Cleveland, for $651,940 for structural steel and metal decking provided and installed.

"I know that Dick is in negotiations with the owners for what we need to remobilize at the site," Comm Steel Vice President Bob Ciofani said yesterday.

VisitPittsburgh, the organization that markets and promotes the Pittsburgh region, said yesterday it suspended the Hilton's membership because it hasn't paid its annual membership fee, said spokeswoman Lynne Glover.

Membership allows the hotel to advertise on the VisitPittsburgh Web site and gives it access to business leads and other services.

Boca Raton, Fla.-based Shubh's money problems aren't confined to Pittsburgh. It owes nearly $1 million in back taxes to the state of Michigan in connection with the company's Detroit Riverside Hotel in downtown Detroit, according to the Wayne County Register of Deeds.

Michigan has filed five liens against Shubh Hotels Detroit LLC, the first in October 2006, the latest in January. Each of the company's five hotels is owned by a separate limited liability corporation.

Shubh owns properties in Boca Raton, in the Cincinnati suburb of Springdale and in Lincoln, Neb.

The general manager of the Cornhusker, a Marriott-branded hotel in Lincoln, said his facility hasn't had any Shubh-related bill-paying problems.

"There was a complete renovation of all the rooms to bring them up to Marriott standards," said Kent Peterson.

A hotel owner like Shubh having money problems wasn't a shock to hotel industry consultant Eric Belfrage.

"I'm not surprised that anyone in the hotel business is having financial problems, given that revenues are down so strongly nationwide," said Belfrage, vice president of CB Richard Ellis Hotels, of Columbus, Ohio.

According to data provided by Hendersonville, Tenn.-based Smith Travel Research, year-to-date through May, the average occupancy rate in the nation's top 25 markets fell 7.8 percentage points, to 58.8 percent. Detroit is among those markets; Pittsburgh is not. The average daily rate in the top markets dropped $14.21, to $120.07, while revenue per available room fell $18.87, to $70.58.

Pittsburgh's occupancy rate through May dropped 3 percentage points, to 55.7 percent; the average daily room rate dropped just $1.77, to $96.56, and revenue per available room fell $3.88, to $53.82, Smith Travel found.

"Pittsburgh's numbers actually were a bit stronger than those nationally," Belfrage said.

New liens against Shubh keep surfacing. Salego Plumbing Co. LLC, Etna, has filed a lien maintaining it's owed $12,346 for work performed. Gokul Inc., doing business as Days Inn of Pittsburgh, is owed $11,327 by Shubh for not paying the fellow hotelier for rooms rented.

Euclid Fish Co., of Mentor, Ohio, said it's owed $22,289 by Shubh for product delivered to the Hilton.

Rick Stouffer can be reached via e-mail or at 412-320-7853.


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