Hotelier Returns to Texas After 10-Year Lull

The renovation will get under way in January, with completion ticketed for fall 2007, says Barry Lall, president of Pinnacle Hotels USA. As the plan takes shape, Lall and his team will be weighing whether to add a second, smaller hotel to the three-acre site at 1617 Interstate 35, just north of the Austin CBD, he tells GlobeSt.com. A decision will be made before the year ends.

Lall says the upside to the acquisition from Presidian Development & Hotel Management Co. of San Antonio is the full-service conversion and management changes. It's also getting a full-service restaurant and bar. Right now, the Doubletree Club is getting $115 per night for rooms, resulting in an $85 RevPAR. Its occupancy rests in the mid-70% range.

The Doubletree flag is the first for Pinnacle's 22-property portfolio, which is heavily weighted with California hotels and a couple in Ohio. Lall says a 10-year franchise was signed in sync with the acquisition, brokered by Hodges Ward Elliott Inc. of Atlanta.

Pinnacle hasn't bought a property in Texas in a decade--and Lall doesn't intend on the nine-year-old Doubletree being a one-off. The Austin hotel caught his eye because "it's a great box, newer property, great location and the brand opportunity to with a Doubletree by Hilton."

The acquisition sweet spot is 125 to 150 rooms, preferably value-adds but not always. And the search is focused on Austin, San Antonio, Houston and "maybe Dallas," Lall says. "The Texas market is improving. Our goal is to add at least two or three hotels over the next year."

Pinnacle acquired the Doubletree Austin University with a $16.2-million loan arranged by Neptune Hospitality Advisors of San Diego. "Given the strong current cash flow of this opportunity, Neptune was able to place very opportunistic, 10-year, fixed-rate financing on the Doubletree taking advantage of today's low interest rates," Stan Kozlowski, Neptune's principal, says in a press release.