DoubleTree by Hilton Oceanfront Atlantic Beach, NC
Investment Date: August 2012
Opening Date: May 2013
Total Rooms: 200
Meeting Space: 12,000 SF
Food & Beverage: Prime 1079 Steakhouse & Lounge, Molly's Beachside Bar & Grill
Investment Overview: Note Purchase, Reposition, and Re-Branding
Once a popular destination resort, the former Sheraton Oceanfront experienced water damage caused by Hurricane Irene and was forced to temporarily close. Due to litigation with its insurance company, the hotel was not able to reopen causing it to enter bankruptcy. SIG had tracked this hotel for a number of years, seeing value add opportunities through a different operational strategy.
SIG saw considerable upside based on two premises. First, the hotel performed at a high level during the spring and summer peak seasons. This provided the hotel with a solid core business. Despite the high occupancy and ADR statistics during the high season, the hotel lagged behind competitors during the other seasons. SIG attributed the hotel flag as one reason. Atlantic Beach is a destination market; consequently the hotel needed a flag that could be supported by such a market. In addition, previous management continually pushed room sales without concentrating on banquet and conference rentals, which is traditionally a driver of room revenue.
In August 2012, SIG entered an agreement to acquire the note that secured the deed to the property. SIG subsequently foreclosed the asset and became the owner of the hotel by December 2012. SIG's development team worked closely and expeditiously with city officials and Hilton Worldwide to reposition the hotel as an affordable luxury resort operating under the DoubleTree by Hilton flag. Within a mere 5 months, the hotel re-opened its doors.
Throughout its first two years of operation, the hotel was experienced year-over-year gains in occupancy and ADR and continues to ramp up business both during the spring and summer peak seasons as well as the crucial off seasons.
In 2013, Hilton Worldwide awarded the hotel Conversion of the Year for DoubleTree brand worldwide.