According to Alameda County property records, the financiers of the Sheraton Pleasanton Hotel filed a notice of default Jan. 16.
AG Inn at the Mall LLC, which owns the 170-room hotel on Stoneridge Mall Road, has not made payments on a $12.2-million loan by Mesa West Real Estate Income Fund LP, confirmed a partner with AG Inn at the Mall.
Rick Swig, of hotel consulting firm RSBA & Associates, said a sharp decline in hotel occupancy in the Tri-Valley is to blame for the financial situation. He said many companies have reduced or completely cut off discretionary spending--meaning no business travel for conferences and meetings. He estimated that the Pleasanton hotel occupancy rate declined 28 percent in December.
The hotel is in a prime location, surrounded by Stoneridge Shopping Center, Safeway's headquarters and is visible from Interstate 580 and the new BART station under construction. But despite that and a recent renovation to the hotel, Swig said the economy has trumped everything. He said the owners of the hotel, which is still operating as usual, are continuing to talk with Mesa West about solutions going forward.
Dan Evans, a senior vice president for Rim Hospitality, which manages the Sheraton, said in a statement that the hotel is still open and will remain so in the future.
"We are indeed open for business, right now and in the future," he said. "We understand the economic environment within the market and we're looking forward to the Tri-Valley's recovery in this. Within the last few weeks, we've seen an upswing."
The hotel has plans for $500,000 in renovations to the club level, top two floors and lobby area that will be completed over the next 10 months.
Amy Blashka, director of the Tri-Valley Convention & Visitor's Bureau in Pleasanton, said businesses are trying to do more with less and because of the economy's steep slump, customers know they have more buying power when it comes to hotel stays.
"I think everybody's suffering but we're trying to do our part and help supplement our hotels with our sales and marketing efforts," she said.
Blashka said hotel occupancy rates for the Tri-Valley region, which includes Pleasanton, Dublin, Livermore, San Ramon, Dublin and Danville, have declined 12 percent in the fourth quarter (October-December), from 67 percent to 55 percent, compared with the same quarter in 2007.
One of the bureau's main roles is to generate leads--or potential business--for Tri-Valley hotels. The bureau works with clients interested in hotel stays by soliciting bids from area hotels on rates. Blashka said that while occupancy is down, there are some signs of improvement.
"We've seen an uptick in our leads for January, more than we've ever had in one single month," she said. "It was about 55 leads, when normally we would have 10 or 12 generated."
If business is picking up, clients seem to be expecting significant discounts on rates.
"People know the economy and they know that they probably have more negotiation and bargaining power and so like everybody else, the clients are also trying to do more with less too," Blashka said. "Maybe they're budgets are scaled back so they can't do the lavish meetings they've had but they still need to get together, so they're looking at ways to maximize their dollar."
Dave Culver, who is the finance director for the city of Pleasanton, said the city received $782,000 in transit occupancy tax money in the fourth quarter of 2007. That same time period for 2008, the city received $690,000, a nearly 12 percent decrease.