Owners of the Marbury House, a 102-room hotel in Georgetown, are nearing agreement with their lenders on ways to bring their payments up to date and avert foreclosure, according to spokesmen for the insurance company and the Texas savings and loan that hold nearly $13 million in notes on the hotel.
A foreclosure sale is scheduled for next Friday by the Alice, Tex., Savings and Loan Association, which holds the second mortgage on the property. But a New York attorney representing the institution said he does not expect the sale to take place. "We have worked out a settlement," said the lawyer, Stephen Seldin. Although the agreement has not been signed, negotiations "seem to be going well," he said.
The Marbury, built four years ago, is one of several hotels facing problems as the glut of hotel rooms grows and occupancy rates tumble in the Washington area, industry observers said.
The Texas S&L loaned the Marbury's owners $1.65 million in 1984, according to D.C. land records. Seldin said the agreement being worked out now would "cure the default," but he declined to discuss the amount of the overdue payments.
Mutual Benefit Life Insurance Co. of Newark, which holds the first mortgage of $11.1 million, also is "working something out" with Marbury owners for payment of overdue amounts, said Robert J. Roebling, the insurance company's real-estate portfolio manager. He also would not discuss the overdue amount owed by the Marbury or the outstanding balance of the loan.
If the Texas lender went through with the foreclosure, the buyer, or the S&L if it took over the property, would be responsible for making the payments on Mutual Benefit's loan, according to Roebling. He said scheduling a foreclosure sale "happens all the time" as a "tactic to get payments current," and that he also does not expect the sale to take place.
One real-estate industry source familiar with the Washington hotel market said that at least six D.C. hotels are on the selling block, including the Marbury and the Grand Hotel, a 265-room luxury hotel at 2350 M St. NW. However, prospective buyers are proving to be scarce. Spokesmen for both the Marbury and the Grand denied that their properties are for sale and said the hotels are more interested in improving their management.
The Grand, built by The Kaempfer Co., a Washington developer, and opened in April 1984, was managed by Regent International Hotels until May 1985. Kaempfer has managed the hotel since then and is "actively looking" for a new management company, according to John Tyers, Kaempfer's director of marketing. "If someone offered us the right price for this property we would take it, but you can say that about almost any business," he said.
The Grand was occupied about 50 percent of the time last year on an average room rate of $160 a night, he said. The dollar rate was lower than usual because of "heavy discounting" used as a "marketing tool" to get customers back into the hotel after the name was changed from the Regent to the Grand, Tyers said.
So far this year, the Grand's occupancy rate has averaged about 35 percent at $143 a night, Tyers said. He said business is slow throughout the city, with most hotels averaging from 30 to 40 percent occupancy at various average rates.
A spokesman for the Marbury's owners said a new management company took over the hotel March 1 and plans to change the "character and the image" of the hotel. "Obviously, we are optimistic about the future potential" of the Marbury, said the spokesman, Keith Taylor.
Marbury Hotel Associates Georgetown Ltd. bought the hotel two years ago, according to Taylor, a representative of Mayer & Meyer Associates of New York City, one of several corporations that are general partners in the company. Mayer & Meyer is "predominantly an insurance sales organization" with real-estate and other investment businesses, he said.
Taj International Hotels, the Marbury's new management company, manages four other Washington hotels, according to Leo Fernandes, who is now the Marbury manager.
Rooms at the hotel cost $130 nightly for a single and $140 for a double during the week, and $90 on Friday, Saturday and Sunday nights. In addition to its rooms, the hotel includes restaurants, conference rooms and 8,000 square feet of retail space.
Taylor said the hotel's occupancy rates are "confidential information" that his company "doesn't have any desire to publish. . . . Everybody's occupancy rate is down. But . . . in the spring I have a feeling that all the hotels will be full."
One industry expert said, however, that the Marbury "has hobbled along since it opened . . . and never has found its niche despite one of the best locations one could ask for," at 3000 M St. NW.
Throughout the city, 1985 occupancy levels were about 69 percent, but one expert predicted the rate could drop to 50 percent within the next 18 months, "about 10 points below what a hotel needs to stay in business," he said. "Those who survive will be the ones with deep pockets."
The Washington Convention and Visitors Association estimates that the number of hotel rooms in the area will rise from 42,000 to 50,000 in the next five years. Many hotels already are offering extra services, giveaways and discount rates to attract guests.