The Wichita City Council wants out of the hotel business, deciding unanimously Tuesday to seek a buyer for the city-owned Hyatt Regency Hotel downtown.
If all goes as planned, the city could close a deal to sell the hotel by late summer.
The question now is whether the city will be able to recoup the money it has invested in making sure an upscale chain hotel is attached to the Century II Convention Center.
The closest comparable transaction was the sale late last year of the DoubleTree by Hilton Hotel, on city-owned land at Wichita Eisenhower National Airport, said Jim Korroch of AG Holdings. He developed several hotels in Wichita and owns the Marriott Fairfield Inn and Suites at the WaterWalk.
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The DoubleTree, similar in size to the Hyatt, sold for about $20 million, Korroch said.
Mayor Jeff Longwell said, “I think we’ll be right in that ballpark or we won’t sell (the Hyatt).”
The city paid about $18.3 million to buy the Hyatt 15 years ago. That was in addition to $10.6 million in city development subsidies to help build the hotel.
Longwell asked Korroch to address the council before the vote was taken.
Korroch said it is near a peak period for the city to get what it can for the hotel.
I think there are several brokers and parties throughout the nation that will look very hard at this hotel.
Jim Korroch of AG Holdings
“I think there are several brokers and parties throughout the nation that will look very hard at (buying) this hotel,” he said.
But he cautioned that the price could be somewhat lower than it otherwise might be because a new owner won’t be able to bring in his or her own management.
The hotel is operated by Hyatt under a management agreement with the city that runs through 2026.
Assistant City Manager Scot Rigby said that agreement will stay with the property, even if the city sells it.
Korroch said that’s an issue because “not many buyers out there want to buy a hotel someone else is going to manage.”
While acknowledging the contract that’s in place, Longwell said he thinks there could be some negotiating room for changing the management without changing the Hyatt flag if that’s what a new owner wants to do.
Although the city wants to be rid of the hotel, it’s not going to let it go at a fire-sale price, he said.
“We want a fair price for an asset that we’ve kept in excellent condition,” he said.
We want a fair price for an asset that we’ve kept in excellent condition.
Mayor Jeff Longwell
The hotel has 17 floors, 303 rooms, 40,000 square feet of meeting spaces, two restaurants, a cocktail lounge, indoor pool and a 500-car attached garage.
It sits on 6.35 acres along the east bank of the Arkansas River at Waterman Street.
The city government has owned the hotel since 2001, six years after it was developed.
The original owner wasn’t making profit goals and wanted to sell it. The city bought it to ensure that it would remain a Hyatt instead of being reflagged to a less-expensive hotel chain.
The thinking was that Wichita needed an upscale hotel in that location, one of the primary gateways to the downtown area and the main hotel for conventions at the city-owned Century II.