Good owner, money needed for Lincoln hotel
Developers think need exists for downtown site

By Tim Landis
State Journal Register, Springfield, IL

Published Wednesday, March 5, 2008

The eventual owners of the President Abraham Lincoln Hotel & Conference Center in downtown Springfield can expect to spend several million dollars on improvements and another million or so a year to create a national brand name.

Word of mouth. Priceless.

“It can be done. If you get the right operator in there with a proven track record, it has great potential,” said Steve Horve of Horve Hospitality Inc., which owns hotels in Decatur and Champaign-Urbana.

Developers, managers and real-estate specialists contacted after the state’s takeover of the hotel at Seventh and Adams streets, said Tuesday that, even in a down economy, there should be a market for a hotel in the heart of a tourist-oriented capital city.

What kind of market, however, will depend on the hotel’s sale price and the condition of the property.

The state plans an extensive review of the hotel to determine what improvements should be made to enhance its value. State Treasurer Alexi Giannoulias’ office then plans to hire a marketing firm to sell the hotel to a private operator. The hotel was built with the help of a state loan, but the developers were declared in default on the loan in 2006.

The 316-room President Abraham Lincoln Hotel, formerly the Renaissance Springfield, is next to the Prairie Capital Convention Center and just across the street from the newly remodeled Hilton Springfield.

Overcoming years of financial difficulties and political controversies will be the new owners’ biggest challenge, said Horve, whose company took over management of the former Holiday Inn in Decatur after that hotel was sold at a foreclosure auction last summer.

The Decatur hotel now operates as the Decatur Conference Center & Hotel. After hotel operators expressed no interest, the city of Decatur intervened last summer and bought the hotel for $7 million. Prior to the sale, the hotel was appraised at $36 million.

“It was not an easy sale. The property was shopworn, and the previous owners had tried to sell it for two years. This was a property everyone was tired of hearing about,” said Decatur city manager Steve Garman.

But he said city officials concluded the community could not afford to lose a major hotel and conference center.

Horve Hospitality has assumed the hotel’s profits and losses and bond debt and plans to purchase the property outright by June 1, Horve said.

He said he expects to put at least $1.5 million into upgrading the Decatur hotel. He also is exploring the possibility of building an adjoining indoor water park.

Horve said he hasn’t decided whether to pursue a national franchise.

“It’s only about $100,000 to get a franchise, but then you have to pay 8 to 8.5 percent of your room revenue a month,” he said.

Converting the Statehouse Inn in Springfield from a Quality Inn to a Clarion Collection cost approximately $5 million about five years ago, said Daryll Smith, general manager of the 125-room hotel just north of the Capitol.

Smith said the Springfield market could use more high-end properties, especially downtown.

“No one wants to lose hotel rooms. We have to have that,” said Smith.

The Hilton Springfield just put about $5 million into a top-to-bottom update of the 360-room hotel. Included was the opening this week of a Bennigan’s Grill and Tavern on the ground floor.

City tourism officials often promote the Hilton, the President Abraham Lincoln and the convention center as a package to conventions and similar groups.

Rick Levin of Levin & Associates, which was involved in the Decatur auction, said the Springfield hotel has some advantages; it is in the state capital and close to local tourism sites.

“It’s just a question of price, and should the state sell it at auction or should they try to sell it conventionally?” he said.

A national convention last summer of more than 1,200 Vietnam veterans and their families was based at the President Abraham Lincoln, and local VVA chapter president John Rachford said reviews of the hotel were mostly good.

“You’re always going to have some complaints, but I think a lot of the national people were surprised by what we have to offer in Springfield,” he said.

Hotel’s history

The President Abraham Lincoln Hotel & Conference Center, 701 E. Adams St., was built with the help of a $15.5 million state-backed loan issued in 1983.

More than 80 individual investors also put money into the hotel, including influential Republican Bill Cellini of Springfield.

The loan was restructured twice, the last time in 1990. But the hotel made only two payments on the loan in the last 10 years and none in the last five years.

A Cook County judge declared the loan in default in 2006, and a receiver was appointed in March 2007. The state of Illinois took possession Tuesday.

The hotel, now operated by a contracted management company, has about 315 rooms. Its average room rate is $115 per night, according to tripadvisor.com.

— Tim Landis