Marriott Corp. Will Take Over at Hotel Intercontinental
Marriott Corp. confirmed Friday that it has signed a preliminary agreement to take over management of the troubled Hotel Intercontinental of San Diego.
Marriott officials said they expect the changeover to be completed by September at the 681-room bayfront hotel, the city’s fourth largest.
Marriott will also manage a 683 more rooms being built in an adjacent $90-million tower scheduled to open in December. The combined 1,364 rooms will make the property the city’s largest hostelry.
The terms of Marriott’s acquisition of the operating rights were not announced.
Open since April, 1984, the Hotel Intercontinental is just north of the San Diego Convention Center, which is being built and is scheduled to open in 1989. The change in operators is subject to approval by the hotel’s primary lender, Los Angeles-based Home Savings of America, and by landowner Unified Port District of San Diego.
Owners to Stay in Picture
The switch was announced Friday in a terse press release issued by hotel developer Pacific Landmark Hotel Ltd., a partnership whose general partner is Torrey Enterprises, a La Jolla development firm owned by Doug Manchester. Pacific Landmark will retain ownership of the hotel, Torrey spokesman Kip Howard said.
Manchester, who was not available for comment Friday, had said in past interviews that the hotel was not generating enough revenue to meet its debt obligations but that he expected it to begin operating in the black once the second tower opens. He blamed his company’s undertaking of “infrastructure” costs, including those related to sea walls and a new street, for the high debt load.
One source close to the deal said Marriott came in at the urging of Home Savings, which reportedly was unhappy with the hotel’s non-room revenues from sales of food, beverage and convention business. The hotel’s occupancy rate, on the other hand, has been “healthy” in last 12 months, averaging in the middle 70% range, the source said.
Home Savings officials were not available for comment on the operator change. Hotel Intercontinental general manager Sandor Stangl also was unavailable for comment Friday.
The hotel’s business has also been hurt by construction delays at the convention center, which will open in 1989, two years behind schedule. The delays have deprived the hotel of a huge flow of delegate business that Manchester’s group had counted on.
Agreement Not Final
While cautioning that the agreement is not final, Marriott officials said they were pleased with the deal. “It fits well with our convention center strategy,” said Ronald E. Eastman, Marriott group vice president for real estate development, speaking from Marriott’s headquarters in Bethesda, Md.
“The property is truly one of the more outstanding hotels in California and on the West Coast,” said Jim Reed, Marriott’s Costa Mesa-based vice president for the Southern California, Asia and Hawaii regions.
Marriott operates 169 full-service hotels with nearly 80,000 rooms worldwide, Eastman said. In addition, Marriott operates 54 all-suites hotels with a total of 7,500 rooms, Eastman said.
