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Texas investors buy northeast-side hotel

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The sale and conversion of a former Ramada Inn at I-465 and Pendleton Pike on the northeast side is bringing a new extended-stay hotel brand into the market.

Suburban Houston real estate investors Ryszard and Claire Zadow bought the troubled 187-room hotel at 7701 E. 42nd St. in an online auction last June for $1.3 million, but the sale didn’t close until Sept. 20. The Zadows own the Indianapolis franchise rights for ExtendASuites, a Texas-based company that started in 2010, and have already rebranded the hotel with that name.

They are in the process of converting it into an extended stay hotel, a segment of the hotel market in which rooms have kitchen appliances and are typically rented by the day, week or month.

Claire Zadow said she and her husband initially will sink about $500,000 into adding a full-size refrigerator and microwave oven to each room and updating finishes. Some exterior improvements already have happened, but most of the work is to be done indoors.

Interior work on the hotel is expected to start next week and finish in time for the Super Bowl. She said the crowds drawn by the Feb. 5 football game “will be a nice little boost for us.” But the property won’t typically rely on such high-profile events to draw customers. In the long run, Zadow predicted the local hotel will snag some of the city’s convention traffic and will appeal to people such as construction workers who are here on temporary work assignments.

“It’s a busy city in the center of the country and is a growing convention area,” she said, explaining the draw of Indianapolis and hotel ownership, both of which are new for the couple. Most of Zadow’s holdings are apartment complexes and single-family rentals in Texas.

The former Ramada, built in 1970, has more than 6,000 square feet of meeting space. It was in the hands of New Jersey-based Unity Bank,  which hired Jones Lang LaSalle last spring to sell the property. JLL took it to market via its joint venture partner, auction.com.

Mark von Dwingelo, a senior vice president of Jones Lang LaSalle’s hotel unit who represented the seller, said the hotel market is in a trough that is attracting investors who want to buy near the bottom of the market.

Indianapolis, in particular, is a good market for investors, he said, because of its interstate network and airport and because it’s relatively inexpensive to invest here. “You aren’t competing with the international dollars” that invest in first-tier markets like New York, Chicago and San Francisco, he said.

Von Dwingelo said the market hit bottom in 2009 and stayed there throughout 2010. After rebounding over the first seven months of this year, he said the hotel market stalled in late summer. Revenue per available room, an indicator of hotel performance arrived at by multiplying occupancy by room rental rates, hit a plateau in August, he said.

He said many hotels are worth only half what they were when the market peaked in the middle of 2007.

David Lee of locally based Lee Hospitality, which owns and manages 10 hotels under the Candlewood Suites and Suburban Extended Stay brands, said extended-stay hotels generally have better occupancy than traditional hotels. But extended stays have been hurt by the country’s economic woes just like traditional hotels, he said, noting that demand is healthy but room rates are depressed.

The development pipeline for new product is bone dry, Lee said, meaning most of the activity in the hotel sector over the next two or three years is going to be in acquisitions and conversions.

 

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  1. I think the poster was being sarcastic and only posting or making fun of what is usually posted on here about anything being built in BR or d'town for that matter.

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  3. So disappointed in WIBC. This is the last straw to lose a good local morning program. I used to be able to rely on WIBC to give me good local information, news, weather and traffic on my 45 minute commute.Two incidents when I needed local, accurate information regarding severe weather were the first signs I could not now rely on WIBC. I work weekend 12 hour nights for a downtown hospital. This past winter when we had the worst snowfall in my 50 years of life, I came home on a Sunday morning, went to sleep (because I was to go back in Sunday night for another 12 hour shift), and woke up around 1 p.m. to a house with no electricity. I keep an old battery powered radio around and turned on WIBC to see what was going on with the winter storm and the roads and the power outage. Sigh. Only policital stuff. Not even a break in to update on the winter storm warning. The second weather incident occurred when I was driving home during a severe thunderstorm a few months ago. I had already gotten a call from my husband that a tornado warning was just southwest of where I had been. I turned to WIBC to find out what direction the storm was headed so I could figure out a route home, only to find Rush on the air, and again, no breaking away from this stupidity to give me information. Thank God for my phone, which gave me the warning that I was driving in an area where a tornado was seen. Thanks for nothing WIBC. Good luck to you, Steve! We need more of you and not the politics of hatred that WIBC wants to shove at us. Good thing I have Satellite radio.

  4. I read the retail roundup article and tried Burritos and Beers tonight. I'm glad I did, for the food was great. Fresh authentic Mexican food. Great seasoning on the carne asada. A must try!!! Thanks for sharing.

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