FLORIDA— The 194-room Cedar Lakeside Inn in Kissimmee, which recently went into foreclosure and was auctioned off for a meager $2.3 million, gives an ideal snapshot of the current state of the overall Florida market and its recovery. Back in September of last year Fisher Auction Co. Inc. was approached by an undisclosed lender to reposition and auction off Cedar Lakeside Inn after the lender got the property back from the borrower. “In this case the borrower stated that they couldn’t make the payments and said that they’d be willing to give the property back instead of filing bankruptcy and going into foreclosure,” Louis Fisher, CEO of Fisher Auction and group president of the Best Value Inn sales division, told HOTEL BUSINESS®. “Unfortunately, making matters worse, was the fact that the borrower was an owner/ operator so the lender had no management company to lean on to keep the property in position. “As a result of my relationship with Best Value Inn, as well as my experience running my own hotels as part of my role as an owner of Cal-Vegas Properties, I agreed to move in, take over the property, run and operate it, make suggestions to increase occupancy, make property improvement suggestions to be submitted to the lender for approval, and auction it off at my other company, Fisher Auction Co. Inc.,” Fisher said. “As things go, on Jan. 16 of this year it was successfully auctioned off, which allowed the lender to get its money without ever having to take title.” During the few months that Fisher’s companies managed the property several changes were made to make it possible for the lender to get the reserve price of $2.3 million at the eventual auction. “We activated the reader board and sign on the exterior that had not been working to get the hotel more exposure because the property had great highway frontage,” said Fisher. “Also, we built a website for the property through Best Value Inn with the hotel positioned as an affiliate of the brand, provided it with an 800 reservation system, and marketing materials,” he said. “As far as the interior renovations go, the property had mold issues,” Fisher continued. “An environmental hazard team was called in and as a result 97 rooms were completely renovated as the carpets were ripped out and the walls were repositioned. Also a new roof was installed.” The key element in the transaction was time because the lender did not want to hold the property for long. So Fisher had to pool his resources using the three companies that he is affiliated with to turn the property around quickly so the lender could get its price. “Lenders are not in the business of running hotels,” said Fisher. “When a lender gets into these situations, the objective is to make the necessary changes to sell the property as soon as possible. In this case all the renovations were completed and the property was sold within six weeks after the lender approved the budget.” While this transaction was a success for all parties, the fact that the lender had to recapture the property to begin with demonstrates the sluggishness in the region. “To put the sale in perspective, there was another property right outside of Orlando that had three golf courses and 500 units that went into foreclosure,” said Gregory Rumpel, senior vp in the Miami office of Jones Lang LaSalle Hotels. “The price being battered around was $15 million. So, a 197-unit property going for $2.3 million is cheap in comparison.” The Florida market has been losing steam since the watershed year of 2000, according to a report by Ernst & Young LLP. Occupancy across the state fell by 4.4% between 2000 and 2001, and by 1.1% between 2001 and 2002. By the same token RevPAR has followed a similar course dropping 6.2% between 2000 and 2001, and by 2.9% between 2001 and 2002. Despite the rough market, Florida did outperform the overall U.S. market. Year-end 2002 occupancy for the U.S. hospitality market came in at 59.2%, while Florida’s 2002 occupan
