The company hadn't focused on hotels as an investment typebefore in Michigan, but the market has taken off nationally and isimproving in the state, even as the Detroit area fights 30% vacancyrates for office buildings and has one of the toughest retailmarkets in the country. Mandich tells GlobeSt.com that though thehotel market took a huge blow a few years ago, it's bouncedback.

"We're back to pre-9-11 days," Mandich says. "Nobody wanted, orcould, sell their properties during depressed times. Nationally,the occupancy rates dropped from 63% to 58%. Now things haverecovered, there are many owners thinking about selling." One largeDetroit-area buyer was RLJ Development LLC, run by billionaireRobert L. Johnson, who purchased 120 hotels in 2006. Theproperties, purchased from White Lodging Services Corp. for morethan $1 billion, included Detroit-area properties such as Marriottsin Pontiac and Grand Rapids.

The Detroit area has good prices because owners have a slightlybetter rate of return in the state as opposed to bigger markets,Mandich says, and the local market is assisted by a stark lack ofnew construction in the past two years. "It's hard to build now,people face a gap where they have to be in construction whilecurrent operators are facing cost advantages, they've already got aproperty. They can raise rates, too, there's not that muchcompetition."