CLEVELAND, Ohio — The Sheraton Cleveland Airport Hotel, located on city land just a few hundred yards from the Cleveland Hopkins Terminal, is multimillion-dollar in debt and could close in the coming months.
The hotel, owned since 2015 by a company called LN Hospitality, has been struggling financially since before the coronavirus pandemic, consistently missing rent and other payments to the city, according to court documents.
The hotel also defaulted on a $12.5 million loan to Arkansas-based Simmons Bank, which sued the company last year.
Cuyahoga County Common Pleas Judge Peter Corrigan recently appointed Clevelander Mark Dottore to serve as receiver in the case, tasked with working with the parties to resolve the dispute. “I guess the hotel will be demolished and there will be parking,” Dottore said.
During this time, the hotel is still open and welcoming guests. However, according to a court document filed by the city, “the current condition of the hotel is also concerning.”
The hotel opened in 1959 with 60 rooms and was expanded in 1972. It is located on the grounds of Cleveland Hopkins International Airport, just east of the terminal building. The hotel has 243 rooms available for rent, plus 39 more that are sealed off, according to a recent property inspection.
The property also includes a 468-space car park, which is used for both overnight guests and airport parking.
Years ago, when Cleveland was a hub for United and Continental airlines, the hotel was a popular and convenient overnight spot for flight crews and travelers stuck between flights. In recent years, it has fallen into disrepair, according to court documents filed by the city.
A municipal inspection of the property in November “identified numerous issues with the hotel’s deficient maintenance, security and upkeep,” according to court documents, including leaking roofs, water damage, fixtures and fittings. dangerous electricity, etc.
In addition to falling behind on rent, the current owners have failed to meet another requirement of their lease with the city, which is to invest $500,000 in airport capital improvements each year, documents show. judicial.
The hotel also owes Marriott International, owner of the Sheraton brand, more than $550,000, according to court documents. LN has also fallen behind on taxes and payments to private vendors.
Airport Manager Robert Kennedy declined to comment on the dispute, citing ongoing litigation.
Robert Patel, who is listed in the documents as a statutory agent for LN Hospitality, could not be reached for comment on Thursday.
LN Hospitality Cleveland is a limited liability company with five California residents listed as members: Bharathbhai (Robert) Patel, Charles Patel, Reema Patel, Mahendra (Michael) Patel and Bhagyavati Patel.
In court filings, the hotel’s owners accuse the city of seeking to modify the lease agreement with a view to possibly reclaiming the property for use in an airport expansion plan. “The city wants to shorten the terms of the leases so that it doesn’t have to pay as much compensation if the city decides to exercise its eminent domain rights in the future,” the filing says.
He said each time LN resolves issues at the hotel, “the city will issue additional default and cancellation notices.”
It concluded: “Due to the City’s misconduct, LN Hospitality was unable to refinance the loans secured by the leases, putting LN Hospitality’s entire investment in jeopardy.”
LN’s Cleveland attorney, Mark Rodio, did not respond to a request for comment Thursday.
Owner since 2015
LN has owned the hotel since 2015, when it purchased the building and parking lot lease for $12.5 million from Oakbrook Properties in Illinois. The lease on the property extends until 2048. The rent is $300,000 per year.
The hotel, including the building and land, is valued at $10.4 million, according to Cuyahoga County property records.
Simmons Bank, which loaned LN $12.5 million in 2018 for the hotel’s capital needs, sued the owners in May 2021 for default.
The city was drawn into the litigation in September 2021.
According to court documents filed by the city, LN fell behind on rent even before the COVID-19 pandemic brought the travel industry to a virtual standstill in early 2020.
The city repeatedly threatened to terminate the company’s lease, as recently as January, according to court records.
Dottore, the receiver, said he was in talks with parties interested in acquiring the property. He said he was unlikely to stay a hotel.
“Whoever buys it will tear it down,” he said. “In my opinion, the airport hotel has become obsolete.”
Occupancy is down, he said, and Cleveland Hopkins is no longer a hub airport with passengers looking for overnight accommodations.
Airport parking has become a growing problem in recent years, as almost all passengers passing through Hopkins begin or end their trip in northeast Ohio. This puts increasing pressure on the car parks as well as the roads inside and outside the airport.
Indeed, the new airport master plan provides for additional parking on the land currently occupied by the hotel. The master plan, completed last year, is a long-term planning document for the airport, to be implemented over the next 20 years.
More parking coming soon at busy Cleveland Hopkins Airport, but some spaces have been removed
Update on $2 billion plan to rebuild Cleveland Hopkins Airport: Preparatory work and funding talks come first