September 18, 2006
By Elena Gontar, Staff Writer

Crescent Hospitality, which changed its name to Crescent Hotels & Resorts as of September 8, has created an acquisition fund to purchase up to $1 billion in hotel assets over the next 12 to 18 months, the company said today. The fund will concentrate on primary and secondary U.S. markets, while acquiring upscale hotels and resorts through direct investment or joint venture arrangements with affiliated as well as unaffiliated partners. Crescent Hotels & Resorts will operate the acquired hotels.

It was always an original plan within the conception of Crescent Hospitality to form the hotel acquisition fund, said Michael George, Crescent president & CEO. The company was first originated with the business plan of eventually becoming a hotel owner.

The company's roots were purely as a manager on behalf of hotel owners. "So we grew the company by being a high-quality, third-party operator on behalf of financial institutions," George told CPN. "Our plan was that once we had established enough size, meaning bulk, number of properties, number of associates within the company and the infrastructure, the ability to be able to operate hotels well, to be able to impact hotels through capital, revenue management and renovations, that we would then start the process of identifying a strategic partner that would be able to bring in substantial capital and pursue a hotel ownership strategy." Allied Capital Corp., a leading business development company and an existing client of Crescent, and the LCP Group, a real estate investment firm, have partnered with Crescent and will focus on three business strategies: ownership, sliver investments and third-party management. "Our preference is to stay within the U.S. domestic," said George. "We will probably target secondary and primary cities, based on what we will believe is more realistic pricing in those market places." The company plans to invest in upscale, full-service hotels. "There is very little new product coming on line, and there is strong demand in many of these markets," he said, noting that with fresh capital comes the opportunity to renovate such hotels.

In its first transaction, the fund has bought the Detroit Marriott Livonia hotel (pictured) located at 17100 Laurel Park Drive North in Detroit, Mich., for an undisclosed amount. Situated within close proximity to Detroit Metro Airport and Laurel Park Place mall, the 224-room property will undergo a $3.5 million upgrade, which is expected to be completed in the first quarter of 2007. "The property was already performing well and did not require a lot of capital," said George.

Scott Berman, principal of hospitality & leisure practice at PricewaterhouseCoopers, said that "according to Smith Travel Research data, for the first six months of 2006 Detroit hospitality market has experienced a 2.1 percent increase in demand and a 10.6 percent increase in ADR leading to a 13.4 percent increase in RevPAR."