Fort Collins Marriotts remain open for business

FORT COLLINS – Three Marriott-flagged hotels in Fort Collins are welcoming guests as usual, despite financial troubles for the property owners. In fact, the Fort Collins Marriott on Horsetooth Road is also welcoming a new general manager.

The local properties held by Los Angeles-based Integrated Capital LLC are in the early stages of the foreclosure process, with the owners months behind on payments on a $32 million note. Integrated Capital purchased The Courtyard by Marriott and Residence Inn, both on Oakridge Drive off Harmony Road, and the flagship Marriott in September 2006.

But Richard Romane, newly appointed general manager for the Fort Collins Marriott, pointed out that all three hotels will continue normal operations now and in the future.

The appointment truly represents a full circle for Romane, who is new to the general manager position but not to the Marriott organization or even the Fort Collins Marriott. While a student at Colorado State University, Romane worked at the Marriott as a banquet houseman, setting up tables and chairs for events.

He graduated CSU in 1996 with a liberal arts degree, then worked at Marriott properties in Alabama and Texas before returning to Colorado and the Denver City Center Marriott. He’s spent the last 10 years in sales and marketing with Marriott International, the parent corporation.

His predecessor as Fort Collins general manager, David McDaniel, is on to a much bigger market – the new JW Marriott Hotel Los Angeles at L.A. LIVE, slated to open in the first quarter of 2010.

“Ever since I left this city, I wanted to come back,” Romane said of Fort Collins. “It’s unique – a great community.”

Romane is now charged with running the day-to-day operations at the hotel and maintaining the standard of quality set by Marriott International. He is undaunted by the prospect of a foreclosure, explaining that it really changes little for the facility.

Marriott International is largely a management company, holding very few properties. It maintains close contact and communication with its property owners.

“We’ve had a tremendous partnership with the ownership group,” Romane said. “We really want them to keep the hotels.”

He added that Integrated Capital, which upgraded most of the properties shortly after adding them to its portfolio, is working hard to restructure its debt.

The management contracts between Marriott and property owners remain in place as ownership changes hands, even if the new owner is actually a lender. This keeps the company somewhat sheltered from the complexities and complications currently sweeping the commercial real estate market.

Not alone

Integrated Capital apparently isn’t alone in its financial straits. The hotel sector led Fitch Ratings Loan Delinquency Index in September. According to the ratings firm’s measurement of commercial mortgage-backed securities, hotel mortgages had the largest proportion of delinquencies at 5.83 percent, surpassing multifamily sector delinquencies of 5.72 percent. By comparison, other sector delinquencies stood at 3.65 percent for retail; 2.96 percent for industrial and 1.97 percent for office.

“The recent surge in hotel defaults is consistent with Fitch’s view that hotel property values will decline by as much as 50 percent from peak levels,´ said Susan Merrick, Fitch managing director and U.S. CMBS group head, in her report. “While budget hotels have fared best during the downturn, continued pressure on the luxury, resort and gaming sub-sectors will likely push lodging delinquencies to approximately double that of the other property types.”

For September alone, the firm tracked 26 newly delinquent hotel loans that totaled $1.1 billion. The largest was a $587.7 million note attached to a $4.1 billion Extended Stay America portfolio loan with 681 hotels across 42 states as collateral.

Despite being untied, for the most part, from the current headache of mass property ownership, Marriott International still feels the economic pressure of the downturn. The company reported a loss of $459 million through the third quarter compared to a $359 million net income for the same period last year.

Romane said he was unaware of whether the company, as a whole, was seeing an increasing number of property owners go into default. Calls to the corporate office were not returned in time for publication of this story. However, the company did report in its third-quarter earnings that it wrote off two loans it extended to property owners totaling $42 million.

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