VOL. 109 | NO. 53 | Tuesday, December 19, 1995
12/19 Real analys
95 Christmas Betides Motel Miracle on Democrat Road
By ED RAINS
The Daily News
When David Gilliam and his partners bought the former Airport Hilton property at Airways and Democrat in November of 1992 for a little more than $1.7 million from the now-defunct Westinghouse Credit Corp., they knew theyd gotten a lot of motel for their money at least in size. At 380 rooms, the 70s-vintage hotel is the third largest in the city, behind the Holiday Inn Crowne Plaza and The Peabody.
What they didnt know was that theyd also bought a facility with 1,400 gallons of jellified diesel fuel in a tank underneath the land, a kitchen described by Gilliam as "a nightmare and a decided health hazard" and a psychotically dysfunctional sprinkler system subject to go off or not go off at any time, depending upon its mood.
Of the 12 central air-conditioning units servicing the grand ballroom and other common areas, only two were functional. Virtually none of the room air conditioners worked. The place was ragged and dirty and forlorn. Nothing met code. The parking lot looked like the business-end of a mortar range, and there was a dead possum in the algae-rich outdoor pool.
Occupancy at the time of purchase was "about as dismal as it gets," at somewhere between 11 percent and 17 percent, Gilliam said. Records from that time are ambivalent. Without a brand name, no reservation system existed to send guests to the place. Marooned, thanks to the completion of Sam Cooper Boulevard and concomitant changes in traffic patterns along Airways, the motel enjoyed zero visibility and therefore zero walk-in trade. As one of more than 200 lodging properties owned by Westinghouse Credit, in 1992 the hotel had lost a cool $1 million.
Clearly, if they didnt have a mammoth problem on hand, the new buyers certainly had a great opportunity before them, and they set about to capitalize on it. According to Gilliam, heres how.
"Since we paid all cash for it, there was no debt service on the property, so we didnt have a note to meet. We looked at our revenues and began estimating how the market might improve in response to certain refurbishments, literally on a day-by-day basis.
"We made those improvements by plowing back in our operating income, all strictly on a cash basis, and we are still doing that. We have not to this day taken a single dime out of revenues. When we took over, we cut staff in response to guest demand. When the restaurant wasn't busy we closed it and sent folks home. We micro-managed. We had to."
The early 90s were hard times for the lodging industry in general, with perhaps 80 percent of lodging properties unable to meet debt service, according to some authorities. Yet, despite the obvious specific handicaps of location and stigma, occupancy began to climb steadily for the full-service property on Democrat. Its investors spent $80,000 on the 11,000- square-foot grand ballroom, re-carpeted hallways and refurbished the first 80 rooms "from the studs out." As revenues justified, elevators and another 160 rooms were completely redone. A new roof was added.
Gilliam bought out the substantial leased inventory of TVs, fixtures and furnishings from the leasing company at a sizable discount, then traded the old inventory in on new equipment. Best Western, for whom Gilliam had worked for 15 years before the current venture, finally was persuaded to fly its flag over the premises. Occupancy continued to climb in 1993, to around 31 percent; by year-end 1994, to roughly 56 percent.
The motel is on track this year to average a whopping 77 percent occupancy, just a tenth of a percent lower than the top-ranking downtown lodging statistics and a remarkable 12 percentage points above the 65 percent average occupancy of the Airport area.
As of the first of the year, the facility again will change flags, this time to Four Points Hotels, ITT Sheratons new full-service, mid-priced hotel brand. Sheraton now offers 17 hotels under the Four Points name in the United States and Canada. Gilliam said he was sorry to leave the Best Western brand, but pointed out that, despite its status as the largest chain in the country in terms of total properties, Best Western lacked strength in airport markets.
Gilliam said the property still attracts almost no walk-in lodgers, depending upon proximity to the Airport, generous referrals by other innkeepers, and, naturally, Graceland.
"There's rarely a night we dont house at least one Elvis guest," Gilliam beamed.
"Two nights ago Jerry Lee (Lewis) was in to play for a Christmas party. He looked around kind of wistfully at the way the place has been fixed up and said it sure did bring back memories."
Ah, benevolent shades of Christmas Past.
Cut Line: "Old Airport Hilton Soon To Fly Under Sheraton Four Points Flag"