Wyndham closure could lead to major redevelopment project

When the 508-room Wyndham Milwaukee Airport Hotel & Conference Center goes out of business and closes its doors, most likely in late December, a highly visible property at Milwaukee’s front door next to General Mitchell International Airport will go dark.

That is obviously bad news for the city and the 133 employees of the hotel that will lose their jobs.

But the closure of the hotel should provide a boost for other hotels in the airport area and an expected sale of the property could set the stage for a major redevelopment project southwest of Layton and Howell avenues.

Fairfax, Va.-based Crescent Hotels & Resorts, the management company for the hotel, recently notified the state Department of Workforce Development that it plans to close the hotel on or about Dec. 22.

It has been public knowledge for some time that the hotel was struggling. The previous owner defaulted on its mortgage and the property was placed into receivership. It was sold at a sheriff’s auction earlier this year to U.S. Bank, which was acting as a trustee for the hotel’s lender, Wachovia Bank, a division of Wells Fargo Bank.

“An analysis of the highest and best use of the property concluded that a use other than as a hotel would optimize the value of the real estate and a business determination was made to close the hotel,” Crescent Hotels & Resorts said in a statement.

Crescent says Wachovia has reached an agreement to sell the property, but did not disclose any additional details.

“The lender identified a buyer offering the opportunity for the recovery of a currently distressed property, and has since entered into an agreement to sell the property,” Crescent Hotels said in its statement.

The hotel, located at 4747 S. Howell Ave., was built in 1960 and expanded several times since then. The building has a total of 397,460 square feet of space, which also includes a conference center, and sits on a 15.5-acre site. The property has an assessed value of $4 million, according to city records.

It is the second-largest hotel in the Milwaukee area. The largest is the 729-room Hilton Milwaukee City Center in downtown Milwaukee.

The hotel has changed flags and ownership several times over the years. Previously it was a Four Points by Sheraton hotel until a conversion to Wyndham in 2007.

The Wyndham is now simply too old and travelers and group meetings are opting for newer hotels, said hotel industry consultant Greg Hanis, president of New Berlin-based Hospitality Marketers International Inc., who did work for the hotel in the late 1980s. Several new hotels have been built near the airport in recent years including a 120-room Courtyard by Marriott at 4620 S. 5th St. and a 143-room Hilton Garden Inn at 5890 S. Howell Ave. Older hotels in the area that have been remodeled and rebranded include the 193-room Crowne Plaza at 6401 S. 13th St.

“(The Wyndham is) just not competitive anymore,” Hanis said. “There’s not much you can do with the property. It’s just past its prime. I think it’s going to be demolished. It has probably had its day.”

The rooms in the hotel are too small and their level of quality is not consistent. The multiple additions to the hotel have created an odd layout, Hanis said.

The hotel was once one of the most popular meeting destinations in the state, Hanis said.

“In its day it was the association meeting capital of Wisconsin,” he said. “Just about every association had their annual meetings there. They had a lot of conferences, trade shows and other events. But that time is well past.”

As group events moved to other venues, the hotel became increasing reliant on business from flight crews, Hanis said. The hotel had one wing specifically allocated for flight crews, he said.

“They were probably living off crew rooms as this thing started winding down,” Hanis said.

Now the other hotels in the airport area will get the flight crew business and any other visitors that had been served by the Wyndham.

The Wyndham is by far the largest hotel in the airport area, but its small staff of 133 equates to a “skeleton crew,” and is a sure sign that occupancy levels were low, Hanis said.

“I would imagine the property is not running that strong of an occupancy rate,” he said. “They’re already scaled down staff because of occupancy.”

“My observation would be a 500-plus room hotel is probably too large there to be profitable,” said Tom Rave, executive director of the Airport Gateway Business Association. “With a property that size, the investment you would have to make to make it competitive is probably not a good economic investment.”

The Wyndham and the Four Points By Sheraton brands suggest a higher end hotel than the property has delivered in recent years.

“My guess is that is not the type of hotel they would like Wyndham to be associated with,” Hanis said.

Unlike much older hotels like the Hilton Milwaukee City Center and the Pfister Hotel in downtown Milwaukee, the Wyndham lacks beautiful historic architecture that attracts some travelers to older hotels, Hanis said.

Even a major renovation likely would not save the Wyndham, Hanis said. It would cost about $25 million to upgrade the property to make it competitive, and even then “you come up with something that is not unique,” he said.

It would make a lot more sense to build a new, smaller hotel on the site for about $20 million and sell some of the excess property on the site for other development, he said.

“The math just doesn’t make sense (to keep the Wyndham open),” Hanis said. “Why wouldn’t I go with something new?”

Many observers expect the hotel to be torn down rather than kept open or re-opened by another owner.

“Because of its age it needs to be torn down,” Rave said.

Ald. Terry Witkowski said he expects at least part of the complex, if not the whole thing, to be demolished.

“It’s so spread out,” he said. “It’s not today’s hotel. It’s not today’s convention center. It is not in the best of shape.”

The city of Milwaukee’s master plan for the southeast side, adopted by the Common Council in 2008, calls for a mixed use town center style development southwest of Layton and Howell avenues. With the pending closure of the Wyndham, a redevelopment of that site could be the opportunity to make the town center vision there a reality.

The town center concept recommended in the master plan is intended to create a mixed-use “downtown” environment to serve residents and workers in the airport area and travelers utilizing the airport. The city’s master plan envisions a large multi-use development at the site with new hotel, conference and training center, entertainment, retail, office and housing development. The town center would have a new local street grid through the site with a public square surrounded by dense, mixed-use development.

The town center could be a key catalytic project for the aerotropolis, the business district around the airport area where supporters seek to leverage the airport to attract more businesses and development.

“That general location could be a very attractive town center site,” said Richard “Rocky” Marcoux, commissioner for the Department of City Development. “There’s no doubt that is a very strategic location and could be a valuable development site.”

Marcoux said he is confident developers will be interested in the site. He and Witkowski have taken developers through the area. The city would be willing to partner with a developer on a redevelopment project for the site. Such a project would be mostly privately financed but the city could provide assistance to pay for infrastructure improvements, Marcoux said.

Having a new hotel and conference center built to replace the Wyndham should be a top priority for any development project at the site, Witkowski said.

“There is a need and an opportunity the way I look at it,” he said. n

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