Host Marriott Corp. announced a $75 million acquisition yesterday of a Ritz-Carlton hotel in Phoenix, Ariz., the latest in a series of recent luxury lodging purchases by the Bethesda-based company.
Host Marriott and the former owner, the Pivotal Simon Group, also are considering forming a joint venture to develop a 13-story addition to the 281-room hotel. The expansion, which would include 150 hotel rooms and five floors of condominiums, comes in response to increased demand from business travelers.
The hotel is attractive to business travelers because it is located in the Camelback Esplanade, a 1.5 million-square-foot mixed-use commercial development in the city's so-called Camelback Corridor business hub.
"Due to the strong demand for office space and expected additions to office inventory in the area, the hotel's ability to draw from this continued growth in the market bodes well for its future success," said Terence C. Golden, Host Marriott's president and chief executive officer.
The Pivotal Simon Group, a partnership between the Pivotal Group, of Phoenix, and Los Angeles-based William E. Simon and Sons Realty, bought the Ritz-Carlton in May 1996 for $37 million.
"We think it's a good time in the hotel business for both buyers and sellers," said Jahm Najafi, a Pivotal Group partner.
Host Marriott expects the Ritz-Carlton to generate $7.8 million in earnings before interest expense, taxes and noncash charges this year.
The full-service hotel also contains a theme restaurant, private dining room, lobby lounge, cigar bar, roughly 30,000 square feet of meeting space and ballroom, fitness center and outdoor pool. The hotel, which was completed in 1988, has received a AAA Four Diamond rating and a Mobil Four Star award.
The hotel is the eighth Ritz-Carlton to be added to Host Marriott's 99-property portfolio, and the latest in a long string of upscale property acquisitions.
"Our 1998 acquisition progress has been outstanding," Golden said. "We have already completed or announced acquisitions in excess of $2.3 billion in 1998, and have a very full pipeline."
As a result, Host Marriott has increased its acquisition target for the year to $2.8 billion.
Host Marriott expects early next year to complete its largest acquisition, that of a portfolio of 13 luxury and upscale full-service hotels from the Blackstone Group of New York for an aggregate value of $1.78 billion.
Pub Date: 5/28/98