ACTION REQUESTED:
Title
Communication from the City Manager with a Request to Approve the Request of EM PROPERTIES to Switch Management of the MARRIOTT PERE MARQUETTE and COURTYARD MARRIOTT from MARRIOTT INTERNATIONAL to FIRST HOSPITALITY GROUP and Authorize the City Manager to Execute any Necessary and Related Documents.
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BACKGROUND: As part of the loan agreement with EM Properties concerning the Marriott Pere Marquette and Courtyard Marriott, the City, along with other lenders, must approve any significant changes in the hotel project, including a switch in management companies. The "Assignment of Management Agreement, Other Project Documents and Development Rights" was executed on April 12, 2012 and includes the following provision in Section 7 (page 4) which reads, in part:
"7. Covenants of Assignors. Each Assignor agrees not to do, or suffer to permit to be done by any third party, any of the following acts without the prior written consent of the Assignee first being had and obtained, to-wit: (a) cancel, terminate or surrender any Hotel Agreement, other Project Document(s), or Development Rights
Any of said acts, if done or suffered to be done without the Assignee's prior written consent, shall constitute an Event of Default."
On April 30, 2014, EM Properties notified the City, through its attorney, of its desire to switch the management of both hotels from Marriott International to First Hospitality Group (FHG) of Rosemont, IL. The notification is attached. The hotels themselves would still be branded and flagged as Marriott products, but management would change from being directly managed by Marriott itself to a third party manager. FHG manages over 50 hotels of various brands and flags, including the Springhill Suites in Peoria. EM Properties has stated that the reason for requesting the switch is to gain more local control of the hotel properties.
FINANCIAL IMPACT: None directly. So long as the hotel performs at the expected rates (occupancy, rates, etc.) a switch in management companies should not make a difference. EM Properties feels that FHG would market the property better.
NEIGHBORHOOD CONCERNS: Unknown.
IMPACT IF APPROVED: The City would approve of the switch in management. Other lenders to the project must also approve before the switch can be made.
IMPACT IF DENIED: EM Properties would not be able to make the switch and Marriott International would remain the manager.
ALTERNATIVES: The City could request that EM properties seek another manager.
EEO CERTIFICATION NUMBER: Not applicable.
WHICH OF THE GOALS IDENTIFIED IN THE COUNCIL'S 2014 - 2029 STRATEGIC PLAN DOES THIS RECOMMENDATION ADVANCE?
1. Vibrant Downtown: Riverfront/ Central Business District/ Warehouse District
WHICH CRITICAL SUCCESS FACTOR(S) FROM THE COMPREHENSIVE PLAN DOES THIS RECOMMENDATION IMPLEMENT?
1. Not applicable.
DEPARTMENT: City Manager's Office