|By Mara Lee and Kenneth R. Gosselin, The
Hartford Courant, Conn.McClatchy-Tribune Regional News
Aug. 27, 2010--The owners of the Crowne Plaza hotel just north of downtown Hartford have filed for bankruptcy, the latest blow to the city's hospitality industry already hard hit in the recession.
The Chapter 11 bankruptcy case is a debt reorganization, not a liquidation; the 350-room hotel near I-84 remains open for business. The company that manages the hotel, Packard Hospitality Group, would not comment on whether the hotel will continue to operate, although there is no sign that it is closing.
The case covers more than $10 million in debt, including unpaid sales and property taxes, according to the documents filed Aug. 18 in federal court in California.
The filing was made by CHOA Vision LLC, which stands for Christian Hotel Owners Association, a group of primarily Korean American investors led by Chan Soo Cho, according to the group's website. The telephone number listed on the website is assigned to a cellphone in Escondido, Calif. A woman who answered said no one was available to comment on the case.
CHOA bought the 38-year-old hotel in March 2007 for $20.2 million from RD Hartford LLC. The city's property assessment last year for the land and hotel was $9.7 million.
The city is one of the major listed creditors, with more than $1.2 million in unpaid property taxes from 2007 and 2008. That money actually is owed to a subsidiary of JPMorgan Chase, not the city, because the city sold the liens.
In addition, the hotel owes $486,000 for 2009 taxes not shown in the filing, city Tax Collector Marc Nelson said.
The state government also is a creditor, with $300,000 in unpaid sales taxes. It was unclear from the filing whether that debt was from room taxes -- money that presumably was paid by guests -- or from purchases made by the hotel. The bankruptcy does not list a mortgage holder as a creditor.
The bankruptcy filing is the latest in a string of troubles for the city's hotel operators, hit by declining occupancy because of less business travel in the recession.
Last year, the city helped bail out the ailing Hilton Hartford on Trumbull Street by backing the owner, Waterford Group, in its application for a federal loan aimed at preserving jobs and keeping the hotel open. Len Wolman, Waterford's chairman and chief executive, told The Courant in early 2009 that the hotel industry's woes locally and nationally were the worst he had seen in 30 years in the business.
And in 2008, The Goodwin Hotel downtown closed. The owner of that property, Northland Investment Corp., blamed long-running operating losses made worse by the recession.
Suzanne Hopgood, president of the Hopgood Group, a hotel and restaurant consulting firm in Hartford, said she is seeing signs of a modest improvement in the hotel business in the city.
The troubles at the Crowne Plaza may be more related to its location, tucked close to I-84, and the difficulty in marketing it to out-of-town visitors as an option close to restaurants and other amenities in the city, Hopgood said.
"They may have been managing it from afar," Hopgood said. "They may not have understood the location being much more challenging than the Hilton or the Marriott."
A visit to the Crowne Plaza late Wednesday showed few cars in the garage, but no indication of lack of maintenance other than some lights out in the skyline sign.
The bankruptcy lawyer for CHOA Vision did not return phone calls for comment. A Los Angeles attorney, Gene Choe, who was listed on the case as managing member for the debtor, also did not return a call.
The website describes the history of the investment group and Chan Soo Cho, its leader: "Chairman Cho's resolute understanding of his successful hotel career is rooted in his religiosity. Although he now sits at the helm of CHOA (Christian Hotel Owners Association), Cho had a humble beginning. Unemployed with his wife and three kids, he was first introduced to hospitality business in 1992 as an answer to his prayers. He and his family worked as manager/maids in a 20-room motel in Dana Point, California, which served as the main catalyst for his passion in hotels. Four years later, he purchased his very first property, Howard Johnson Inn in Escondido, California.
"Since then, he educated and aided his associates in the path of motel business which became the foundation of his group. His motel circle rapidly expanded which is now being transformed into a circle of bigger and much more prestigious hotel properties through his accumulated knowledge over the years. He is still involved in spiritual as well as practical mentoring of hundreds who seek the same path.
"CHOA is currently headed toward much bigger projects all around the nation and plans to establish its own franchise of luxurious hotels. CHOA's most lofty goal is to not only surpass the current standards in lodging industry, but also to glorify the name of Christ through its success."
The bankruptcy filing lists the hotel's address at 50 Morgan St. as the location of the principal asset. It does not list other hotel or motel properties.
The company has not paid any property taxes since November 2008. Nelson, the city tax collector, said the city had sold the liens for the second installment of 2007's taxes and for 2008 taxes.
The subsidiary of JPMorgan that bought the liens paid $1.2 million for them, and they will be the ones to take the loss if the company does not pay all its debts, Nelson said. That, he said, illustrates the value of selling liens. "We're not holding the bag in the $1.2 million."
The single largest creditor is Zep Inc., an Atlanta company that provides detergents, pest control and other chemicals for commercial customers, including hotels. Zep is owed about $2.7 million.
Jeff Bierly, general manager of the Crowne Plaza, who works for Packard, would not say what the hotel's occupancy rate has been this year, but said it has improved over last year. He said he didn't know anything about what the owners were doing to restructure the property's debt.
"My focus here is to drive revenues and make sure guests have the best possible experience," he said.
Staff Writer Don Stacom contributed to this report.
To see more of The Hartford Courant, or to subscribe to the newspaper, go to http://www.courant.com/.
Copyright (c) 2010, The Hartford Courant, Conn.
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