WESTERVILLE, OH— Cross Country Inns is proof that no matter how well-meaning and well-planned the lodging initiative, it can not succeed in the long run if the capital necessary to keep it competitive is not expended. The ambitious notion of Triangle Real Estate Services impresario Donald Kenny, Sr., Cross Country Inns came into being nearly two decades ago as an economy/budget-level chain of limited-service properties primarily located in Ohio and Kentucky. With most of the properties in what would become a two-dozen-location portfolio constructed in the late 1980s/early 1990s, Cross Country Inns enjoyed several years of operational success until its operational viability was laid low by a combination of a tumbling economic environment as well as increasing competitive pressures. Ultimately, 15 properties— with 13 carrying the Cross Country Inn name, one converted to the Best Western brand, and the other being transformed into a Super 8— fell into receivership with the Chicago, IL-based Fairfield Financial Group, which retained Atlanta, GA-based Thompson Calhoun Fair (TCF) to arrange a suitable disposition of the portfolio. Plusses And Minuses “Back when they were introduced, Cross Country Inns had a lot of good things going for them, as well as some things that ended up working against them,” said TCF Principal Keith Thompson. On the plus side, the hotels featured exterior corridors, had the room rate— for every room in the house— posted on their signs, and even offered the revolutionary concept of a drive-up registration window for guests checking in at night, he said. However, Thompson theorized these advantages may well have been muted by the chain’s decided dearth of advertising and marketing activity as well as a financially limited commitment to capital expenditures and upgrades. “[The chain’s] operating mantra was ‘clean the rooms and they will come.’ If they stop coming, then the rooms just aren’t clean enough,” he said. In light of this operating stance, Thompson said it was clear such a hamstrung promotional and renovation process would eventually mean Cross Country Inns would no longer be able to effectively compete with many of the newer properties— and heralded brands— that are coming on line. Kenny was approached about selling the properties before they fell into the lender’s hand, but the locally based business chieftain declined to take advantage of the opportunity offered by TCF at that time, according to Thompson. However, the lesson of that missed opportunity— that of failing to allow TCF to market the properties— was not lost on Fairfield. Working in concert with brokerage executives of McLean, VA-based Molinaro Koger, Thompson and his TCF team were able to sell the 816-room portfolio in what he described as “a comparatively easy transaction. The entire process took just four months— from listing through closing,” he said. And even though the portfolio was sold to Columbus, OH-based Core Properties Ltd. for something less than the $29 million asking price, in total, Thompson maintained the purchase still amounted to an appropriate price on a per-room basis. “Moreover, the process was further eased by the fact the transaction included seller financing, with the bank staying very much in the mix.” Perhaps that worked out for the best as well, what with Core Properties President/CEO Jeff Coopersmith concurring that the amount of debt owed on the properties was actually higher than the final selling price— a scenario that made for a most “advantageous decision for us,” he said. Given his company’s role as a cash-flow investor, Coopersmith pointed out Core Properties is necessarily focused on minimizing risk in any transaction in which it becomes involved. As such, Core Properties is committed to moving these newly acquired properties, capitalizing on the profit potential inherent to buying the hotels in bulk and subsequently shedding them in separate, one-off deals, he said. To this end
