The City of Phoenix is ending their time in the hotel business by selling the downtown Sheraton next to the convention center to Marriott at a $50 million loss after opening during the low point of the real estate downturn 10 years ago. The development did help spur downtown activities in and around the Phoenix Convention Center and downtown development.
City of Phoenix exiting hotel business....Selling their Sheraton Hotel to Marriott
Source Photo: www.sheratonphoenixdowntown.com
The Arizona Republic reported, "Phoenix has officially sold the massive Sheraton Grand Phoenix hotel for $255 million — about $50 million less than what the city owes on it. Hotel giant Marriott International purchased the 1,000-room hotel, according to a news release.
The Phoenix City Council voted to sell the hotel to TLG Phoenix — a subsidiary of Florida-based TLG Investment Partners — last year.
But earlier this year, Marriott expressed interest in owning the hotel and formed an affiliate with TLG Phoenix to purchase it. Marriott spokeswoman Connie Kim saidMarriott International has 100 percent controlling interest. Marriott International will manage the hotel and serve as the majority capital partner, with plans for a significant renovation of guest rooms and public space "to transform the property into a cutting-edge model for the Sheraton brand," according to a release.
Sheraton became part of Marriott International in the 2016 mega merger of Marriott and Sheraton parent Starwood Hotels & Resorts.
There are 115 Marriott International branded hotels in Arizona representing 21,629 hotel rooms under 21 different brands, including JW Marriott, AC, Sheraton, Marriott, The Ritz-Carlton, Moxy, W and Westin, Kim said.
"The hotel will provide a living and breathing showcase of our new vision for the Sheraton brand, underscoring our commitment to restore the brand to its leadership position," Marriott International President and CEO Arne Sorenson said. According to the release, Marriott International plans to sell the hotel, subject to a long-term management agreement, after it renovates the building.
City spokeswoman Julie Watters told The Arizona Republic in May that TLG has told the city it intends to retain all current hotel employees.
Phoenix tried the hotel business
Phoenix spent $350 million to build the hotel, which opened in 2008.
It was the biggest Sheraton to open since 1992 and the first to feature a modern look, including an internet café and plush beds. It was built to help Phoenix attract more groups to the newly expanded convention center.
But its opening coincided with the Great Recession. Phoenix hotels were hit particularly hard by the economic downturn, which forced the city to spend $47 million to cover operating losses. Now the hotel is turning a profit. In the past few years, it made $16 million, according to the city.
Still, the city council voted to sell the hotel in an effort to get taxpayers "out of the hotel business," according to multiple council members."
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