Marcus Hotels Planning To Double Size Of Portfolio By 2008

MILWAUKEE, WI— When hotel companies announce aggressive expansion goals, some plans are little more than grand strategizing. Others, however, are more grounded in reality. In the case of Marcus Hotels & Resorts, plans to double the size of the portfolio by 2008 are backed up by a string of recent acquisitions in its headquarters city here, Columbus, OH, and Oklahoma City, OK. Also part of the plan are new construction projects in Chicago and in Las Vegas. Currently with 15 hotels and 4,000 rooms, either owned and managed or managed under third-party agreements, Marcus, which is part of the Marcus Corp., has grown cautiously up to now, but is serious about stepping up the development pace. A turning point came two years ago when the company sold its mid-price Baymont Inns & Suites chain for $395 million to La Quinta Corp., which, in turn, was acquired by the Blackstone Group. Blackstone then sold the brand name and franchising system to Cendant Hotel Group. “Divesting Baymont was a benchmark transaction for us because it allowed us to raise our sights higher,” said senior vp, development David Merritt. “Marcus has always been involved with full-service hotels, but it’s now a main focus. In cities like Milwaukee, Columbus, and Oklahoma City, the intention is to have the premier product in what are basically second-tier markets.” National Expansion A second part of the Marcus strategy is geographic. “We want to move beyond our historic base in the Midwest to become much more national in scope,” Merritt said. “Oklahoma City is an example of that, but certainly so is Las Vegas.” The company’s most recent deal was in March, when it purchased the 186-room Westin Columbus from affiliates of Berwind Property Group, Ltd. Marcus will now make a significant investment in renovations at the property. “We view Westin— with all its signature services and amenities, starting with the Heavenly Bed and including the new smoke-free policy—as a value-add in that market,” Merritt explained. A special expertise that Marcus has in-house, according to Merritt, is for food and beverage. “Accordingly, we’re rethinking the hotel’s restaurants and other outlets. If properly done, they can be a way of bringing more local people to the hotel and improving its visibility.” Other recent acquisitions include the 220-room Wyndham Milwaukee Center and the 224-room Skirvin Hotel in Oklahoma City. The Skirvin is an historic hotel that’s been closed for 20 years. Given the hotel’s historic status, Marcus was eligible for historic tax credits. The local government is an investor in the project. After extensive renovations are completed, the hotel’s scheduled to re-open in February 2007 as a Hilton Hotels Corp. franchise called the Hilton Skirvin. The Las Vegas condo-hotel project is the 225-suite Platinum Hotel & Spa, located a block off the Las Vegas Strip, opening this summer. “The suites all sold within 60 days, which means the project is already a success financially,” Merritt said. A majority of the buyers were local, living within a 75-mile radius, who are putting their units in the rental program when they’re not using them. Marcus retains an ownership stake in the hotel’s spa, restaurant, and lounge. The Platinum was the company’s second experience developing a condo-hotel, having already built the 355-room Grand Geneva Resort & Spa in Lake Geneva, WI, in the greater Chicago area. That project includes an indoor water park, so it’s proven especially popular with young families. In downtown Chicago, Marcus developed the recently completed 226-room Four Points by Sheraton, a brand that’s part of Starwood Hotels & Resorts Worldwide. Unlike the Baymont chain, Four Points operates at the higher end of the mid-price tier and includes F&B. The downtown Chicago property has three F&B outlets. In terms of ownership, Marcus is prepared to develop by itself, to co-develop, or to take sliver equity. Or it can strictly manage under a long-term third-party agreement. A value of holding even a sliver stake is that it makes Marcus as manager view operations through the eyes of an owner. “It gives you that owner’s perspective that can be very valuable,” Merritt said. In addition to the hotel division, the Marcus Corp., whose stock is traded on the New York Stock Exchange, is a major owner/operator of movie theaters, mostly in the Midwest. ignature services and amenities, starting with the Heavenly Bed and including the new smoke-free policy— as a value-add in that market,” Merritt explained. A special expertise that Marcus has in-house, according to Merritt, is for food and beverage. “Accordingly, we’re rethinking the hotel’s restaurants and other outlets. If properly done, they can be a way of bringing more local people to the hotel and improving its visibility.” Other recent acquisitions include the 220-room Wyndham Milwaukee Center and the 224-room Skirvin Hotel in Oklahoma City. The Skirvin is an historic hotel that’s been closed for 20 years. Given the hotel’s historic status, Marcus was eligible for historic tax credits. The local government is an investor in the project. After extensive renovations are completed, the hotel’s scheduled to re-open in February 2007 as a Hilton Hotels Corp. franchise called the Hilton Skirvin. The Las Vegas condo-hotel project is the 225-suite Platinum Hotel & Spa, located a block off the Las Vegas Strip, opening this summer. “The suites all sold within 60 days, which means the project is already a success financially,” Merritt said. A majority of the buyers were local, living within a 75-mile radius, who are putting their units in the rental program when they’re not using them. Marcus retains an ownership stake in the hotel’s spa, restaurant, and lounge. The Platinum was the company’s second experience developing a condo-hotel, having already built the 355-room Grand Geneva Resort & Spa in Lake Geneva, WI, in the greater Chicago area. That project includes an indoor water park, so it has proven especially popular with young families. In downtown Chicago, Marcus developed the recently completed 226-room Four Points by Sheraton, a brand that’s part of Starwood Hotels & Resorts Worldwide. Unlike the Baymont chain, Four Points operates at the higher end of the mid-price tier and includes F&B. The downtown Chicago property has three F&B outlets. In terms of ownership, Marcus is prepared to develop by itself, to co-develop, or to take sliver equity. Or it can strictly manage under a long-term third-party agreement. A value of holding even a sliver stake is that it makes Marcus as a manager view operations through the eyes of an owner. “It gives you that owner’s perspective that can be very valuable,” Merritt said. In addition to the hotel division, the Marcus Corp., whose stock is traded on the New York Stock Exchange, is a major owner/operator of movie theaters, mostly in the Midwest.