Major player Wyndham gets prestigious Checkers hotel; boost to downtown L.A. tourism scene is foreseen.

A limited partnership that includes a major hotel operator was expected last week to buy the financially troubled Checkers Hotel Kempinski in downtown Los Angeles.

Dallas-based Wyndham Hotels & Resorts, as part of the Grand Avenue Limited Partnership, was scheduled to take over the property's operations last Friday, April 1.

According to an official at Sumitomo Bank of California, the main lender on the property, the Wyndham transaction moved forward last week after a public auction of the hotel failed to produce a better deal.

"That's (the sale) great," said Michael Collins, senior vice president of the Los Angeles Convention & Visitors Bureau. "It's good news because Wyndham is a nationally -- and internationally -- known brand name. It's good for downtown because it confirms the viability of the area that a recognized company would invest in a hotel."

A spokeswoman for Wyndham, Cary Broussard, said it was against company policy to comment on pending transactions.

The luxury Checkers, with 188 rooms that go for between $180 and $1,000 a night, has been in financial trouble for some time. Local hotel analysts have said the 70-year-old property has had a particularly difficult time during the three-year-long decline in the downtown market. In recent months that trend has started to reverse.

Hisashi Takiguchi, vice president and division manager of the special assets division of Sumitomo in San Francisco, said the bank foreclosed on the Checkers the day of the March 29 auction. When Sumitomo foreclosed it officially took over the hotel, which allowed the Wyndham deal to go through, said Takiguchi.

He said several parties expressed an interest in the hotel but none matched the Wyndham offer. He said Wyndham had been negotiating with the bank for a few weeks prior to the auction date.

Takiguchi said the partnership will buy the hotel for between $10 million and $20 million, well below the assessed value of $35.7 million. At the auction, the minimum bid for the hotel was $12 million.

"The downtown Los Angeles hotel market is very depressed right now," said Takiguchi.

Last month, when the bank announced the auction to sell the property, it said that negotiations with the hotel's owners to restructure a $17.8 million loan had fallen apart. At the time, Takiguchi said the owners were behind on more than $850,000 in payments.

The Checkers' owners had been a group called 535 S. Grand Associates, a limited partnership made up of local investors, Kempinski International Hotel Group and Japanese interests.

Kempinski, a German hotel company owned by Lufthansa Airlines, managed the hotel that is at 535 S. Grand Ave., across the street from the Biltmore hotel and next to the newly reconstructed Los Angeles Central Library.

Takiguchi would not comment on other members of the new ownership partnership, or whether any of the former owners will be part of Grand Avenue Limited Partnership.

He said Wyndham would likely take over the management of the hotel. When there is a management change, he said, the normal procedure is for current employees to submit their resignations and then they are rehired at the discretion of the new management.

Takiguchi said he didn't know if the hotel would change its name.

Wyndham Hotels & Resorts currently owns or operates what it calls 50 "upscale" hotels in the United States, Bermuda and the Caribbean. The company has three product lines: luxury hotels, "garden" hotels and full-service resorts.

In a background statement about the company, Wyndham says it is developing "hub-and-spoke hotel clusters in the top 25 markets."

The downtown hotel was built in the early 1920s as the Mayflower and then was redesigned,renovated and renamed the Checkers in 1984. In mid-1992, Kempinski was brought in to manage the hotel and took an equity position in the property.

Local hotel analysts have said the hotel struggled because it has never been able to identify itself with a large market, and suffered because of several years of construction at the library. Some analysts have theorized the hotel has depended too much on the German travel market and failed to sell itself in the U.S. and in Pacific Rim countries.

Over the past few years, all downtown Los Angeles hotels have struggled with low occupancy rates because of the lack of major convention business and the recession. Business has started to pick up in recent months as the economy has improved and as the expanded Los Angeles Convention Center opened. The Convention Center is about one mile south of downtown.