A Houston company is negotiating to buy the 703-room Omni Inner Harbor Hotel for roughly $24 million, a move that could result in the second sale of the city's largest hotel in as many years.
If the sale to the Gencom Group reaches fruition, it would cap a year of frenzied activity provoked by improved occupancy and room rates at hotel properties in the area.
Analysts also attributed the renewed interest in local hotels to planned or nearly completed expansions of tourist attractions. These are expected to greatly enhance the city's $1 billion annual tourism industry.
"The fact that the expansion of the Convention Center is more than a dream, and close to becoming reality, will have a big impact on hospitality properties in Baltimore in general, and more on the Omni in particular," said Robert T. Koger, president of Molinaro Koger, a Virginia hotel broker.
"And because the Omni is the largest hotel in Baltimore, it caters to large groups and business travelers, and makes a sale now all the more reasonable."
In addition to the $150 million Convention Center expansion, more than $70 million is earmarked for the Power Plant, Christopher Columbus Center, Port Discovery Children's Museum and Harborplace.
Since the twin-towered Omni at 101 W. Fayette St. was sold by a Westinghouse Corp. affiliate in December 1993 to Patriot
American Investors Ltd. Partnership, which represented a consortium of investors led by Apollo Real Estate Investments, it too has undergone an estimated $7 million renovation.
New York-based Apollo bought the hotel for $17.5 million, less than half of what was paid for the property nine years earlier.
If the sale of the 28-year-old hotel occurs, it would mark the second local property disposition by Apollo, which this time last year sold the debt on the 26-story 250 W. Pratt St. office tower for $32 million.
Gencom owns 31 hotels
Gencom, a firm created in 1991 by Karim Alibhai, owns 31 hotels, primarily in Texas and Florida.
"We will have no comment until after the first of the year," a Gencom spokeswoman said.
Patriot American and Apollo also declined to comment.
Mr. Alibhai became aware of the 360,000-square-foot Omni because of a long relationship with Patriot American, sources said.
Gencom was one of the initial investors in Patriot American Hospitality Inc., a real estate investment trust that went public in October. In exchange for transferring several hotels to the real estate investment trust. Mr. Alibhai was awarded 6 percent of the REIT's common stock.
Moreover, Gencom American Hospitality, the company's hotel management arm, continues to operate most of the REIT's projects, according to documents filed with the Securities and Exchange Commission.
Gencom's 5,747 hotel rooms ranked it among the nation's 20 largest independent management firms in 1994 based on gross revenue, according to a survey by Hotel Business.
Omni's labor problems
If it assumes management of the Omni, Gencom American may have to contend with a labor dispute that last month caused employees to decertify their local union. A federal mediator is working to resolve the dispute. The Omni is the city's only major unionized hotel.
Most of Gencom's hotels were purchased at prices lower than replacement costs, allowing it to benefit greatly from industry improvements, sources familiar with the company said.
Hotel industry profits are expected to hit a record $7.9 billion this year, and climb to $11.7 billion by the end of 1997, according to data compiled by Coopers & Lybrand LLC.