Foes choose their brands in hotel duel Paterakis team goes for Wyndham; Angelos for Hyatt; Importance of franchisers; Only one project likely to be built, an official says


Developers competing to build a new $100 million-plus hotel on opposite sides of downtown yesterday revealed major brand affiliations, fueling what is becoming a feverish battle to supply rooms to benefit the newly expanded Baltimore Convention Center.

At Inner Harbor East, a site near Little Italy that the city's economic development agency selected in February for a publicly subsidized, 750-room hotel tower, a team led by H&S; Bakery Inc. owner John Paterakis Sr. announced that Wyndham Hotel Corp. will serve as its franchiser.

Wyndham, a Dallas-based operator of more than 100 hotels and resorts in North America, also would be the brand name on a 200-room garden-style hotel that the Inner Harbor East team is proposing.

Meanwhile, Orioles Chairman Peter G. Angelos signed a letter of intent late Tuesday with Hyatt Hotels Corp. to be the operator, 20 percent owner and franchiser of an 800- to 1,000-room hotel planned for city land just west of the Convention Center.

That projected $150 million hotel would become one of only five Grand Hyatt hotels nationwide, joining Atlanta, New York, San Francisco and Washington. The new hotel would have no effect on the 487-room Hyatt Regency Hotel at 300 Light St.

Company officials indicated it is likely that only one hotel project would be built.

"I am delighted to hear the news that Wyndham is coming to Baltimore's Inner Harbor East area," said Mayor Kurt L. Schmoke, in a prepared statement. "I am confident that these two facilities will support the expansion of our convention business and create a unique waterfront destination."

Schmoke's comments came prior to Angelos' announcement, and he could not be reached to discuss the Angelos/Hyatt proposal.

M. J. "Jay" Brodie, president of the Baltimore Development Corp., the city's economic development agency, said the BDC has not received a proposal from Angelos, and declined comment.

Angelos is expected to file a formal proposal for his planned 24-story hotel near Oriole Park at Camden Yards with the BDC in the coming weeks.

Naming a franchiser was one of seven conditions that the BDC placed on the Inner Harbor East team when it was selected over proposals for the former News American site on East Pratt Street and the Baltimore City Community College's downtown campus.

The other conditions, which have yet to be addressed, include firm financing commitments and parking and design issues.

Franchisers are important in the hotel business, because they provide owners with access to nationwide reservation systems, provide national marketing to groups, often contribute to a hotel's advertising and are usually essential to obtaining financing.

With Wyndham, which has only signed an agreement in principle, the Inner Harbor East team has selected a company that analysts consider "a decent brand."

"Wyndham is, typically, for larger properties like that, a first-class hotel -- on par with the Marriotts, the Hiltons, the Sheratons and so forth," said Mark Mutkoski, a Bankers Trust New York Corp. hotel analyst. "They've got a solid management team, and I think it's a decent brand. They're certainly an up-and-coming brand."

In selecting Inner Harbor East, though, Schmoke and the BDC faced a torrent of criticism because the team failed to provide critical information required by the agency's request for proposals -- including identifying a franchiser -- and because the site is a mile from the Convention Center.

Brodie said numerous questions about the Inner Harbor East proposal still must be answered.

The Paterakis team, which includes Atlanta-based developer-operator Stormont Trice Corp. and Atlanta contracting giant H. J. Russell & Co., also garnered criticism because it is seeking roughly $40 million in public subsidies from the city and the state.

The Inner Harbor East hotels ultimately would be owned by Patriot American Hospitality Inc., a Dallas-based real estate investment trust that in mid-April announced plans to buy Wyndham and 11 hotels from the Trammell Crow family for $1.1 billion.

Don Trice, president of Stormont Trice, said Patriot American will provide permanent financing for the Inner Harbor East projects.

"The power of the Wyndham brand, in concert with the development and management talents of the Stormont Trice Russell team, will undoubtedly result in a successful project for the city of Baltimore," said James Carreker, Wyndham's chairman and chief executive.

While the two development teams took pains to avoid criticizing one another directly, each pointed to flaws in the other's plans.

"If this hotel location was next to the Convention Center and not on the water, we, as an investor, would be far less interested in this project," said Thomas W. Lattin, Patriot American's president and chief operating officer. "It is a well-known fact that hotels in the city of Baltimore located on the harbor substantially outperform those off the water."

Angelos and his partner brushed off that criticism, pointing to the need for a new hotel to directly serve the Convention Center.

"I have no great desire to be in the hotel business," Angelos said. "But the project that we are proposing is critical to the success of the Convention Center. And it will ensure that the $150 million invested in the Convention Center represents public money spent wisely."

"With a Convention Center hotel, proximity is a critical component," he added. "The question is, what hotel is the most appropriate to serve the Convention Center?"

"There are few names in the hotel business that are in the same league as us," said Dale Moulton, Hyatt's vice president of development. "And Wyndham is not one of them. We are uniquely tailored to convention business."

In Baltimore, 60.3 percent of Hyatt's rooms are occupied by convention-goers. Nationwide, roughly 30 percent of other brands' rooms are booked for the same purpose, according to industry averages. Moulton noted that, while operators rarely own equity stakes in projects, Hyatt, closely held by Chicago's Pritzker family, holds ownership interests in one-third of its properties.

Angelos, who intends to file his proposal with the city before revealing details about it, did say the hotel would have its main entrance on Eutaw Street, and that the project would contain 70,000 square feet of meeting space and amenities associated with a four-star hotel.

Moulton added, however, that both hotels will not likely go forward, because of room demand in the city.

"It would be irresponsible for both to proceed," Moulton said. "Hopefully, common sense will prevail and the right project will go forward."

At a glance

Wyndham Hotel Corp. owns or leases 23 hotels and has management or franchise contracts for 79 additional hotels.

Headquarters: Dallas

Chairman, president and CEO: James D. Carreker

Yesterday's stock price: $26.75, unchanged

52-week high: $31.25 on Feb. 26.

52-week low: $16.75 on Sept. 11

Market capitalization: $539.82 million.

1996 revenue: $147.7 million

1996 earnings: $24 million

In April, Patriot American Hospitality Inc. said it had agreed to buy Wyndham Hotel Corp. and 11 Wyndham hotels owned by related partnerships for $1.1 billion. Deal expected to close later this year.

Pub Date: 5/15/97

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