One of Maryland’s Largest Hotels Avoided Bank Foreclosures

The 108-room Hagerstown Hotel and Convention Center in Maryland fended off bank foreclosures after working out a tentative agreement with its lender, BB&T. The hotel was scheduled to be sold in an auction at a county courthouse before the management made a tentative deal with its lender.

Director of sales Roy Arnold said that the deal with BB&T represented a big opportunity for the hotel to continue its operation in a way that Hagerstown is accustomed to.

Hagerstown-Washington County Convention and Visitors Bureau Chief Executive Officer and President Tom Riford said that the survival of the Hagerstown Hotel, which sits on a 6.1-acre property, is vital to the tourism sector in the area.

He explained that the hotel is one of the four full-service facilities in the area that attract small-size to medium-size conventions. Hagerstown Hotel features meeting facilities, lodging and a restaurant.
Hagerstown Hotel was purchased by Watchwood LLC in November 2006 for around $7.4 million. Currently, the hotel’s ownership is under Bahman Inc. Before it was sold to Watchwood, the hotel was owned by businessman Nick Giannaris who opened it in 1970 and operated it for 10 years.

Arnold recalls that the troubles of the property started last year when recession spread across the country, affecting consumer spending and the business travel sector. He also cited the popularity of Internet which gives businesses a chance to hold cyberspace meetings instead of booking them at hotels.

The result of these turn of events was reduced room occupancy rates at Hagerstown Hotel, with sometimes just 28 percent of rooms were occupied.

However, Arnold pointed out that owners of the Hagerstown Hotel were determined to continue the business which currently has 90 employees. The hotel is also bent on promotion such as radio advertisements, pool parties and buffets.

On the other hand, Riford said that the hotel’s problems are rooted more on delays in its 2006 acquisition which cost the owners revenues that they would have earned from busy summer operations.

The hotel’s sales deal was made in the spring of 2006 but the property was transferred only in November.

He also pointed out that the hotel suffered a setback when it broke its ties with the Four Points by Sheraton chain, resulting to Hagerstown Hotel’s lost of the latter’s national reservation system.

Nationwide, the recession has caused foreclosures on some hotels but generally, banks take control of them to protect their investments and put in place a management company.

By Cassiano Travareli