Dec. 11--Stung by falling room-occupancy rates and by allegations of racial discrimination, the Adam's Mark hotel chain has agreed to sell six of its 24 hotels to a Kentucky company. 

Bill Yung III, president of Columbia Sussex Corp. of Fort Mitchell, Ky., said Monday that his company entered a contract Nov. 28 to acquire Adam's Mark hotels in Memphis, Tenn.; Houston; Philadelphia; Columbia, S.C.; Clearwater, Fla.; and Colorado Springs, Colo. He declined to release the sale price for the group of hotels, which have a total of about 2,400 rooms. 

Fred Kummer Jr., chief executive of HBE Corp., which owns the Adam's Mark chain, said last week that the terrorist attacks Sept. 11 prompted him to try to sell some hotels to raise cash. The attacks have reduced travel sharply and hotel stays nationwide. Kummer declined to provide details about his plans to sell parts of his Creve Coeur-based chain, which he launched in the 1970s. 

Kummer confirmed the deal Monday through a spokesman but declined to comment further. 

In today's market conditions, the sale price is likely to be far below what it would have been even a year ago, industry observers have said. To begin with, the value of hotel properties has sunk because occupancy rates began falling last spring and then plummeted after the attacks. 

In addition, lenders are not making capital available to finance hotel deals, a fact that further depresses hotel prices, said Jeff Dallas of Los Angeles, a hotel consultant with Ernst & Young. "In today's market, there will be hurdles no matter who the buyers will be," he said. 

Selling at this time suggests that Adam's Mark has a serious need for cash, though other hotel chains face similar woes, said Gary Andreas of Chesterfield-based hotel and health-care consulting firm Tellatin, Andreas & Short. 

"It signals that there really is a cash need, but they are not alone in that," he said. "You could pick any major hotel company that's privately held or publicly traded and make the statement that there are some serious financial troubles, with the exception perhaps of Marriott." 

Andreas said he had not expected Kummer to part with the hotel in Colorado Springs. "That's kind of a jewel," he said. 

Yung said the deal, which is expected to close late next month, is still dependent upon winning approval from lenders to replace HBE as the borrower on loans for the hotels. He did not elaborate on the financing, though he said some lenders have agreed to the change. If the lenders do not agree, "That would stop the deal," he said. 

Yung said Columbia Sussex plans to operate the six hotels under the names of other chains. The company operates 54 hotels under franchises such as Marriott, Crown Plaza and Radisson. 

Changing the names of the hotels might help their financial prospects because the Adam's Mark chain has struggled with allegations of racism for years. 

Over the last decade, Adam's Mark has been hit by multiple claims that it discriminated against African-American guests and employees. The National Association for the Advancement of Colored People announced a boycott of the chain last summer, but it called off the boycott last week after Kummer agreed to pay $1.1 million to settle allegations that the Adam's Mark in Daytona Beach, Fla., discriminated against black guests in 1999. 

In 1994, a U.S. District Court jury in St. Louis awarded two former managers nearly $5 million after finding that they were victims of discrimination. The amount of damages was reduced on appeal to $500,000, but testimony in the trial indicated a pattern of unfair treatment toward black employees. 

The allegations against Adam's Mark rose to a crescendo in 1999, when people attending the Black College Reunion Weekend in Daytona Beach, Fla., said the hotel there discriminated by making them wear wristbands and charging them elevated room rates. The federal government filed discrimination allegations over the incident, and the NAACP launched its boycott. 

"Publicity like that for a hotel chain is sort of like food poisoning for a restaurant," Andreas said. "Whether it's true or not, the stigma still lingers." 

Kummer has denied that his hotels discriminated, but last week, he acknowledged a problem. 

"My name is Fred Kummer, and I have discriminated against African-Americans people," he said. "So has everyone else, I believe. But that doesn't mean I'm right. I'm going to work on it every day." 

In Philadelphia, where one of the hotels is being sold, employees have filed suit accusing the Adam's Mark hotels in eight cities of racial discrimination. 

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(c) 2001, St. Louis Post-Dispatch. Distributed by Knight Ridder/Tribune Business News. MAR,