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FOSTER'S DAILY NEWS - One of Dover's Newest Hotels Goes on the Auction Block

July 07, 2009

Article published Jul 7, 2009
One of Dover's newest hotels goes on the auction block

DOVER - Two years ago, the new Microtel Inn and Suites near Weeks Crossing was boasted as one of several examples of the city's burgeoning North End and hospitality industry.

On Thursday, the grounds of the 57-room hotel will become the scene of a foreclosure casualty when the property is auctioned by JJ Manning Auctioneers, a Yarmouth Port, Mass.-based company contracted by the Bank of New England.

According to the legal notice of foreclosure, the Bank of New England will sell the property at public auction "for conditions broken."

Daniel Luker, the Concord-based attorney representing the Bank of New England for the foreclosure, did not return a message seeking comment Monday.

Both the Webb Place Microtel Inn and Suites and hotel franchise is owned by Krishna Realty Group, of Dover. Messages left at the hotel were not returned by owners Monday.

The hotel's general manager, Lyndsay Peabody, said the foreclosure "is probably directly related to hotel sales," which she said have been low due to the slumping economy and "little to no marketing" by the owners.

Both of those factors were exemplified in May, when the hotel failed to sell out during the weekend of the University of New Hampshire graduation ceremonies, which is typically one of the busiest weekends for area hotels.

"At first we had sold out, but we had a lot of cancellations," Peabody said. "Some people said they decided to stay with family or drive back. It's at least $100 to stay (at the hotel), and $100 is a $100. So if you can pay $20 in gas, instead, I guess you are still saving money."

That's a trend she said she has heard from employees at other hotels in Dover, too. And this summer, as the value of the dollar begins to recover, she said the hotel has not benefited as much from increased travel to the United States by Canadians looking to get more worth for their dollar.

Peabody said she has also been tracking booking trends for several of the hotel's large clients that use the hotel for business trip accommodations, and there has been a noticeable change in how the rooms are booked.

"Companies that used to get a private, single room for each traveler are opting to have a room with two beds and have the travelers share," Peabody said. "And companies that were paying for them (travelers) to stay would rather them drive two or three hours back home then back the following day."

But the problem with sales at the hotel go beyond the common economic woes effecting all of the hospitality industry as consumers seek to curtail discretionary spending, Peabody said. As a new hotel, she said, little has been done to advertise locally and unlike many other hotels and even other franchises, the Dover Microtel does not dedicate any staff member exclusively to marketing.

No marketing campaigns have been initiated since the busy summer season began, Peabody said, and the last campaign the franchise participated in was in October, when the nationwide chain initiated a general campaign for the entire brand.

"The best kind of marketing I can do right now is word-of-mouth," Peabody said. "The feedback is positive and all I can do is hope they come back and tell their friends. That's the simplist and cheapest form of marketing I can do."

She said the hotel also gets some help from other "across the board" marketing, such as online reservations from the nationwide company website.

But she added that she hopes all of that changes on Thursday.

For Peabody, the best possible scenario would be for the hotel to remain a Microtel franchise under the new owner. If the hotel changes to another company, Peabody said that would likely mean the building would have to close during the busiest time of year to make changes to the building, which would mean disrupting reservations and the five extended stay guests currently at the hotel.

"We would be displacing them," Peabody said. "To displace those people would mean five angry guests who tell five people, who tell five more people and so on. It wouldn't be a very good idea. And I think Microtel as a franchise is a very good franchise."

The hotel property was purchased by Krishna Realty Group in October 2006 for $2,119,601. The winning bidder of the auction must pay a $50,000 deposit by the day of the auction and pay any additional funds needed to secure 10 percent of the bid price within five days of the auction or "written proof acceptable to the Mortgagee, in its sole discretion, of the successful bidder's financial ability to timely pay the balance of the Bid Price," according to the "Memorandum Agreement of Sale" that is included in the "Property Information Package" provided by JJ Manning Auctioneers.

The closing on the property must also occur within 45 days of the sales agreement.

The auction will be held on Thursday at 11 a.m. at the hotel.