Wilmington DoubleTree hotel set for auction block

WILMINGTON – The DoubleTree by Hilton Hotel Downtown, one of the largest hotels in center city Wilmington, is heading for the auction block later this month.

The 217-room hotel on North King Street is adjacent to the three principal courthouses for chancery, state, federal and bankruptcy courts, which are major drivers of foot traffic and presumably bookings at the hotel. The opening bid is set at $3.3 million in the online auction scheduled to run Dec. 12 to 14 on the Ten-X platform.

CBRE is the brokerage handling the auction, including local office representative Brian Hopkins.

The DoubleTree has been owned since 2014 by real estate investment firm ASAP International Holdings, a California-based holding company that invests in U.S. hotels on behalf of wealthy Chinese investors.

It acquired the hotel for $19.725 million, according to county land records, and was the firm’s first purchase on the East Coast. Today, it owns 35 hotels spanning the continental U.S. and Hawaii.

ASAP invested in a 2016 renovation of the now-44-year-old DoubleTree Wilmington that features nearly 25,000 square feet of event space, surpassing all competitors in the market by more than 150%. Other features include law centers, secure covered parking, a business center, meeting rooms, a café and restaurant, a fitness center, and more.

The auction listing notes that it is unencumbered by a management agreement and does not have a unionized workforce.

“After a change in ownership and the execution of a Property Improvement Plan (PIP), a new owner can further elevate their earnings by leveraging the hotel’s prime downtown location alongside an upgraded product offering, thereby paving the way for increased profitability and appealing exit capitalization opportunities,” the auction listing reads.

A reason for the sale was not provided, and CBRE has not responded to requests for comment on the upcoming auction, but ASAP Holdings is nearing the 10-year mark of ownership, which is a common time for equity investors to look to exit a property.

While likely that the auction would produce a sale above the opening price of $3.3 million, its pricing and the very need for an auction only exemplifies the difficult state of the hospitality industry as it continues to recover from the COVID pandemic. A sale at the opening bid price would result in a loss of more than 80% on the investment without factoring in any renovation or operational costs.

New Castle County’s hotel occupancy still has not rebounded to pre-pandemic levels, with a year-to-date average of 60.2% as of August falling below 2019’s 65.2% for the same period, according to Delaware Hotel & Lodging Association data. That’s due in part to reduced corporate business travel as videoconferencing has become more common after the pandemic.

But one of the industry’s most important metrics, revenue per available room (RevPAR), has nearly rebounded to 2019 levels, with New Castle County’s year-to-date RevPAR through August falling less than 50 cents off 2019. That essentially means that higher room rates and longer stays have allowed operators to make up for fewer rooms being booked.

The potential sale of the DoubleTree would also add to a changing hospitality market in Wilmington, where Canon Hospitality Management acquired the Courtyard Marriott Downtown for $5 million last month and Buccini/Pollin Group (BPG) sold its Homewood Suites by Hilton Wilmington Downtown hotel to a Virginia real estate investment firm for more than $26 million in July.

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Author: Jacob Owens