Registry Hotel Shuts Doors; 230 Left Jobless

Angry employees, confused diners and a handful of executives were the only people left at the Registry Hotel on Wednesday as the bankrupt inn wound down operations and finished closing its doors.

Unable to find a buyer or make a required debt payment, the Registry’s management relinquished control Tuesday to Homestead Savings & Loan Assn. in Burlingame, the Registry’s principal creditor.

Although Homestead would not discuss the hotel’s future, several observers said it appears likely that the inn eventually will be sold to another hotel operator.

The Irvine hotel, across MacArthur Boulevard from John Wayne Airport, began shutting down late Tuesday.

By early Wednesday morning, the 293-room hotel had already transferred most of its 150 guests to nearby hotels and told its 230 employees that they no longer had jobs.

About 20 remaining guests were relocated to nearby hotels by mid-morning, although employees of General Rent-A-Car said some pre-booked guests were simply met at John Wayne Airport and told that the hotel had closed. General, which had offices inside the Registry, has set up temporary offices in a parking lot trailer.

Registry employees, meanwhile, showed up at the hotel Wednesday to receive their final paychecks.

“I’ve never seen anything like this,” said Raymond N. Kovacs, the Registry’s vice president and general manager, referring to the abrupt closing. “This is not the way a hotelier would treat people.”

Kovacs said he has no idea when the hotel might reopen.

Other Registry employees were embittered by the sudden closing.

“They let the whole staff go without notice,” said a member of the bell staff who declined to give his name. “We’re all out of jobs, with no place to go.”

The closing ends a long struggle to keep the Registry afloat. Fierce competition for patrons in the John Wayne Airport area plus the $26-million debt owed to Homestead Savings combined to put the 10-story hotel into financial straits.

But it wasn’t always that way.

When the Registry opened in 1976, it was the first large, upscale hotel in the airport area. Lavishly decorated in French Provincial and early American styles, with amenities such as tennis courts and a concierge floor, the Registry did well for about 10 years.

By the mid-1980s, however, the hotel faced serious competition from at least a dozen other upscale hotels that had moved into the area, including the Hilton, Marriott and Sheraton chains.

The Registry originally borrowed about $25 million from Homestead to pay for a plush refurbishing. Ironically, the effort to attract more guests by sprucing up the Registry appears to have contributed to its downfall.

The hotel “closed floors down . . . and lost market share,” said Kovacs, the general manager who joined the Registry 6 months ago. “New hotels were coming on stream. . . . It was difficult to recover.”

Homestead filed a foreclosure suit against the Registry in October, 1987, seeking immediate payment of its loan or sale of the property. According to the lawsuit, the hotel began to default on its Homestead loan in July, 1987, when it failed to make a scheduled $178,044 payment.

The partnership that owns the Registry, Associated Investors Joint Venture of Dallas, filed for protection from creditors under federal bankruptcy laws on Nov. 13, 1987, listing debts of nearly $30 million. About the same time, the partnership began seeking more investors to try to rescue the hotel.

Meanwhile, increasingly stiff competition for hotel patrons made the hotel’s situation worse.

In 1988, the Registry’s occupancy rates were below 65% in 1988, said Kovacs--although he added that the hotel would have been profitable if not for its debt service. A former employee who requested anonymity said occupancy for the past several months has been “anywhere between 15% and 45%.” Kovacs said that estimate is not correct.

In general, hotels in the airport area averaged occupancy rates of 63% to 65% last year, said Sandra Louvier, a member of the hotel consulting group at Laventhol & Horwath, a Costa Mesa accounting firm.

“In that range, some broke even, some didn’t,” she said.

A source close to the Registry said the final straw came Feb. 1, when Registry President Charles Lanphere was unable to meet a deadline for finding a financial backer, obtaining a letter of intent from a buyer, or making a $200,000 payment on the loan.

The hotel “had been talking to a number of interested parties,” the source said, but nothing was finalized by the deadline.

Lanphere declined to comment.

On Monday, U.S. Bankruptcy Judge John E. Ryan in Santa Ana approved the transfer of control to Homestead Savings. And by noon Tuesday, Registry officials received word that the hotel’s closure was imminent.

In a prepared release, Associated said the partnership felt giving control of the Registry to Homestead “was in the best interests of the hotel as well as Homestead Savings because the efforts to sell the property at this point have been unsuccessful.”

G. Eric Lonnquist, senior vice president and general counsel with Homestead, declined to comment.

The Registry source said a receiver was expected to be appointed soon to maintain security at the hotel, while Homestead takes the facility through foreclosure proceedings.

“There may or may not be a foreclosure sale,” he said. “Ultimately, I suspect there will be.”

If there is, the hotel will go on the block in what industry observers say is a glutted market, particularly for business travelers.

Laventhol’s Louvier and partner Richard Kepper suggested several chains might be interested in the Registry’s location, including Hyatt Hotels Corp., Omni Hotels Group and Doubletree.

In a prepared statement, Registry executives said a placement office has been set up to help employees find new jobs.

That provided little comfort to some laid-off workers. Several said they had known the hotel was for sale but had been assured their jobs “probably” were safe.

The Registry’s luncheon customers were equally baffled Wednesday, many of them getting as far as the lobby before they realized that the hotel had shut its doors.

“I come here at least twice a month, so it’s kind of a shock,” said Dee Ham, a bank employee. “What I liked about it was that it was quiet. You could walk right in . . . and not have to shout.”