PORTLAND-Locally based Grand Heritage Hotel Group, in the midst of a major remodel of the Downtown Governor Hotel and adjoining Princeton Building the company acquired last year, is complementing its local portfolio with the purchase of a 50% stake in the riverfront Avalon Hotel & Spa, which it was picked to run earlier this year by owner-developer Paul Brenneke. The sale price was not immediately available, but the property as a whole is believed to be valued at about $11 million.The 99-unit hotel has been tangled up in bankruptcy reorganization for several months. The Chapter 11 filing capped a fierce battle for control of the property between Brenneke and his former partners–a battle ultimately won by Brenneke. Once Brenneke regained full control of the property this summer, he promptly let go the previous hotel manager (Waterford Hotels and Inns Inc.), which had been unable to run the property profitably. He brought in Grand Heritage, which had recently acquired the Governor Hotel, relocated its headquarters to the property from Maryland and was on the lookout for opportunities to expand its holdings in its new home town.”We’ve been in the black every month since they took over,” Brenneke tells GlobeSt.com. “The property had never been in the black before that; it’s like night and day.”Brenneke’s reorganization plan, which includes the recapitalization with Grand Heritage, is expected to be approved by the bankruptcy court on Nov. 1. Meanwhile, Grand Heritage continues its multi-million renovation of the historic Governor Hotel and adjoining Princeton Building, both of which it acquired in October 2003 for $14.5 million. The work includes relocating the hotel entrance and lobby from 10th Avenue to 11th Avenue, creating room for the popular Jake’s Grill to expand its presence on the 10th Avenue side; putting a Starbucks franchise at the corner of 11th and Alder; creating a new entrance on Alder Street for the longtime basement gym, which is being converted to a day spa; recapturing a 10,000-sf four-floor ballroom most recently utilized as executive office suites; converting a mezzanine on the Princeton side into offices for the company’s headquarters. Additional elevators and guest room renovations are also part of the plans. The goal is to have the renovations complete by November.Grand Heritage CEO John Cullen tells GlobeSt.com that while $100,000 is usually spent to build out a corporate-owned Starbucks, the budget for his franchise location is closer to $300,000. Designed to feel “like your rich uncle’s living room,” Cullen says the location features a pressed-tin ceiling, designer furniture, a fireplace and free Internet access. Cullen says he was able to get approval for a Starbucks franchise because of his successful operation of another Starbucks franchise in one of the company’s properties, the Biltmore in Providence, RI.In addition to the Governor and the Biltmore, Grand Heritage’s portfolio includes the Stanley Hotel in Estes Park, CO; and the Vanderbilt Hotel in Newport, RI. The company’s goal is to create an international portfolio of historic and luxury hotels. Cullen says the company is currently in negotiations that would add an additional five hotels to the portfolio in the coming months.With that in mind, the company recently expanded its management team with the appointments of Michael Schurer as vice president and chief financial officer; Michael Mason as vice president of people; and Victor Mills as northeast regional vice president. Schurer, who will be relocating to the company’s headquarters in Portland, previously served as the CFO of Humphrey Hospitality Trust, a publicly traded hotel REIT, and Humphrey Hospitality Management Inc., a privately held, third-party hotel management company. He also held various senior roles over an eight-year term at Marriott International and its timeshare development subsidiary, Marriott Vacation Club International. Mason most recently was a private consultant, and prior to that was vice president of human resources for Starwood Hotels & Resorts Worldwide Inc. Mills, who will be based in Rhode Island, is a turn-around specialist who has been general manager of several notable properties, including the Marriott Warner Center, Los Angeles; the Peabody Hotel, Memphis; the Hilton & Towers, Greenville, SC, and the Peabody Orlando Resort & Hotel in Orlando.

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