Red Lion Inn South undergoes ownership, flag changes

The Red Lion Inn South on East Battlefield has seen a whirlwind of activity this year and not in the form of overnight guests. From its Chapter 11 business reorganization filed Jan. 23 to the Sept. 25 purchase of the hotel by H&B Springfield LLC, the property at 3370 E. Battlefield Road has been owned by four different entities.

Meanwhile, the hotel has suffered monthly losses in excess of $30,000, according to documents filed with the U.S. Bankruptcy Court for the Western District of Missouri. But Brad Gebhard, a principal of the new ownership group, hopes to change things.

"We think we can bring it back up to where it was before," he said, referring to the $1.8 million annual revenues it averaged from 1996 to 1998 under the Courtyard by Marriott flag.

Gebhard and his father Hal own seven other hotel properties in southwest Missouri under the H&B Springfield entity. They plan to change it to a Quality Inn & Suites within 60 days and invest $200,000 in capital improvements by spring. Gebhard did not disclose the transaction value.

The hotel's bankruptcy filing was due to a trio of name changes and subsequent financial losses, said Dean Lessley, majority owner of Hotel Partners II, the hotel's original ownership group. It comprises seven business partners from across the country, two of whom Lessley and Frank Emery are from Springfield.

The Western District bankruptcy court approved a May 2 auction of the property to liquidate its assets. According to court records, Lessley's $3,465,000 was the high offer at the auction.

However, he failed to close on the property by the June 30 deadline, and the hotel fell into the hands of its primary lender, Bank of America. Lessley Development Companies borrowed $3.9 million from Bank of America in 1993 to construct the hotel. Another $300,000 was borrowed from The Bank, according to court records.

"Following an offering at auction in May 2002 and a subsequent termination of the auction contract for sale," a court document reads "debtor (Hotel Partners II) received multiple offers from third parties, including The Bank in Springfield."

A $2.5 million offer from The Bank was accepted Sept. 6, and the transaction closed on Sept. 16. The Gebhards purchased it on Sept. 25.

"Back in the Courtyard (by Marriott) days we knew it was an exceptional property," said Brad Gebhard. "The loss of franchise and the re-flagging of an inferior brand, we think, contributed to its present state. We think the proper flagging will pump new life into it."

Requirements of the Quality Inn & Suites flag, which is affiliated with Choice Properties Hotels, include two-bedroom suites. There is only one suite now. Gebhard said 13 of the 121 rooms will be converted to the Quality Inn-approved suites. Other amenities include a 100-person meeting room, exercise room, conference room and outdoor pool.

"It's going to be a high-end Quality Inn & Suites," he said.

Members of Hotel Partners II say two brand changes led to its demise. Lessley, managing partner of the hotel under Hotel Partners II, instituted a change to a Guest-House International Inn in 1999. He said the decision was based on Marriott's high franchise payments: 12.5 percent of gross revenues, compared to industry standards of around 7 percent.

During the two-year GuestHouse International affiliation, the hotel averaged an abysmal 1 percent to 2 percent occupancy, Lessley said. Subsequently, the ownership group joined the Red Lion Hotels flag in 2001.

Hotel revenues never recovered, and after successive monthly operating losses last year Hotel Partners II filed for bankruptcy.

Quality Inn & Suites will be the hotel's fifth flag in as many years. Gebhard hopes it helps to turn the hotel's revenues around.

The Gebhard family has been in the hotel industry for 35 years. The family owns Super 8 hotels in Nixa, Branson, Monett and one in Arkansas, and the Days Inn and Best Western in Mountain Grove.