A Middle Eastern luxury hotel and hospitality giant plans to remake the Holiday Inn Resort & Conference Center on Grand Island into an upscale destination center after winning an auction of the property Wednesday.
Byblos Hospitality Group of Dubai teamed up with downtown Buffalo developer Roger Trettel and a Buffalo General Medical Center surgeon, bidding $4 million for the 263-room property along the Niagara River.
Plans are still being developed, but Trettel said the new owners want significant upgrades and renovations to the hotel to make it more of a resort in line with the company’s properties in the United Arab Emirates, which he said are four-star hotels with multiple restaurants in each.
The 40-year-old Holiday Inn, on 12 acres at 100 Whitehaven Road, has 26,000 square feet of meeting space, two swimming pools, a fitness center and a banquet center. But it hasn’t had any major upgrades in years. “It’s a one-of-a-kind opportunity and location,” Trettel said. “We’re really excited about it. It’s a spectacular location and underutilized. We feel we can do a lot more with it.”
The changes will likely lead to a new brand and identity for the hotel, which has been a Holiday Inn for years. The franchise agreement expires in 2014, but the new owners have yet to decide whether to go with another North American hotel brand or the Byblos name.
“They’re looking at this as an investment opportunity to bring the brand to North America,” said Trettel. “All the details haven’t been hammered out yet. But there’s definitely a goal of making it a destination hotel.”
Founded a few years ago by CEO Jean Samman, who emigrated to the UAE in 1979, Byblos operates five luxury hotels – Byblos Hotel, Marina Byblos Hotel, Capitol Hotel, Moscow Hotel Dubai and Broadway Hotel – plus a hotel residence, an entertainment club, a chain of coffee shops and a chain of Lebanese restaurants, all in the UAE and particularly in Dubai. A new resort boutique hotel will open by 2014.
Byblos is represented in the partnership by Samman and Naji Najdi of Windsor, Ont., who helps Byblos manage its hotels. Besides them and Trettel, the investor group includes Dr. Fadi Dagher, a surgeon at Buffalo General. Dagher is a friend of Trettel and Najdi, and brought the group together.
“We have made some plans. We see a lot of potential here,” Dagher said, adding that “most likely it’s going to stay a hotel.”
This is the first hotel project for Trettel, a Grand Island resident and environmental consultant who is better known for his development efforts in the 500 block of Main Street downtown, but he and Dagher will be minority investors, leaving the operations to Byblos. “I’m just the guy who brought it to their attention. They will be operating it,” Trettel said.
While Byblos will likely put in its own manager, Trettel said, “The majority of the existing staff will be retained and given an opportunity to grow.”
“They really like the existing staff that has been brought in the last couple of years to turn it around,” he said. “There’s a really good team here. The goal is not to change that out.”
The property was sold by Royal Bank of Canada, which had foreclosed on it two years ago because the bank was owed more than $7.9 million on a mortgage by the previous owners, American Hospitality Group LLC, which bought it in 2004. The bank wrote down the value of the loan significantly and tried to auction it in February 2011, but it was the only bidder, putting up the minimum amount of $500,000.
Since then, the bank has worked to stabilize and “reposition” the property, investing more than $950,000 in it before trying again to sell it.
The final contract price, including the 10 percent “buyer’s premium” or commission, will be $4.4 million. The group now has up to 45 days to seal the deal.
The state Department of Environmental Conservation has submitted a written offer to purchase about 0.9 acres of the shoreline property for preservation and to protect a rare plant found there. Trettel and his partners can now opt to accept that $165,000 offer, getting cash back immediately.
Wednesday’s auction was run jointly by Tulsa, Okla.-based AmeriBid, a global real estate auction firm, and Blackbird Asset Services LLC of Williamsville, with Blackbird President David Fiegel acting as the auctioneer.
The hotel is expected to post revenues of $4.946 million for the full year, with a projected profit of $168,000. It has been averaging 85 percent occupancy and reached 92 percent the night before the auction.
By the end of the year, the hotel will have hosted 37 weddings; it has already booked 38 for next year. “This is not a distressed situation,” Fiegel told the auction crowd. “It’s doing fabulously, so bid accordingly.”
Ten bidders had each placed deposits of $100,000 to participate, with interest from Toronto and Niagara Falls, Ont., and from as far away as Lebanon.
Bidders, who had signed confidentiality agreements in advance of the sale, were provided with a 480-page property information package, although Fiegel corrected some of the information before starting the bidding.
Fiegel would not identify any of the other bidders. Visions Hotels, a company based in Corning that owns several properties in the Buffalo Niagara region, denied that it was one of them.
“I was hoping we’d get more, but the bank is very pleased,” Fiegel said. “Royal Bank is very happy. It was right where they needed to be.”