New Operator Sought for U.S. Grant : Owner Reaffirms Commitment to $30-Million Investment
For months, Mitchell Davis of the New York-based Sybedon Corp. said nothing as rumors swirled about the future of the company’s lavishly restored U.S. Grant Hotel in downtown San Diego. But on Friday, Davis and Sybedon talked back.
No, Davis said, his company has no plans to sell the hotel. Yes, he said, his firm is seeking a nationally known company to replace Atlas Hotels as the operator of the Grant, a decision that should be made within 90 days.
And yes, the hotel will undergo changes to improve the quality of its service and attract more business.
Davis, senior vice president of the real estate firm that has $30 million invested in the hotel, said now was the time to talk. “At one point, we were saying absolutely nothing. But it got to the point . . . so many innuendoes were being made that were not appropriate and we thought it was time we spoke out.”
Although the hotel has lost about $7 million in both operating and debt service expenses since opening a year ago and has struggled with high vacancy rates, Davis told reporters at a press conference at the hotel that Atlas made the decision to drop out as the Grant’s operator.
This occurred because Atlas, which traditionally has operated middle-of-the-line hotels, found that its effort to branch into the upscale, luxury hotel market--of which the Grant was the first such endeavor--was not to its liking, Davis said.
“Quite frankly, I think they’ve done a hell of a good job,” Davis said, adding that Sybedon wanted the company to stay on.
The continuing losses, which Atlas officials and Davis say have been greater than anticipated, played a critical role in Atlas’ decision.
Atlas came to the conclusion, Davis said, that “it was a business mistake to continue with this property.” Under the terms of ownership and financing, Sybedon bought the block-square property that houses the Grant and helped pay for its restoration and then leased it back to developer Kit Sickels and Atlas.
For the past year, the Grant has averaged only a 45% occupancy rate, Davis said, though the pace increased to 70% in November, and with projections, based on pre-bookings, of 65% to 75% for January, February and March.
“There’s not a hotel in this country that makes money its first two years,” Davis said, adding that it usually takes five to six years for a new hotel to stabilize its business. Still, he said, “Nobody likes losing money.”
A marketing consultant hired by Sybedon has made some preliminary recommendations about how to improve the Grant and some of the suggestions will be instituted as soon as possible.
Among the changes are the construction of a health club for hotel guests, an agreement with Singing Hills Country Club in East County to provide hotel customers a place to play golf and tennis, free transportation provided to guests who have business meetings downtown, setting aside an entire non-smoking floor, offering sandwiches and other low-cost lunch items in the cocktail lounge, contracting with Home Box Office to provide television service and expanded concierge services to the hotel’s 64 suites.
Sybedon, according to Davis, is optimistic that downtown San Diego is a good location for a luxury hotel such as the Grant. He noted that publicity about Horton Plaza and the last wave of high-rise office buildings have helped turned around downtown’s two-decade decline.
