Guest rooms will be fully remodeled, public spaces redesigned, including a larger coffee bar in the lobby and moving some food services downstairs

BILLINGS (LEE) -- The sale of the Sheraton Billings Hotel may be final by early August, and the new owners plan to pour $10 million into a top-to-bottom makeover of the downtown Billings landmark.

The Hotel Group of Edmonds, Wash., a 40-minute ferry ride from Seattle, started looking at the Sheraton on March 15 and has signed a buy-sell agreement.

"We looked at a lot of properties," President Doug Dreher said. "We feel there is a lot of potential in the state and in downtown Billings."

The Hotel Group is conducting due diligence now and if everything goes according to plan, the sale could be completed in 40 days.

If this sale goes through, he said the $10 million investment will be the largest his corporation has made in its 22-year history.

The Hotel Group purchased the Embassy Suites hotel in Columbus, Ohio, this week. It manages 68 hotels now and owns another 31 hotels, including two under construction.

The 282-room Billings property will set a milestone.

"Here's the neat thing about the Sheraton Billings. It will be our 100th hotel, presuming we buy it, so that will be nice," Dreher said.

Company executives and designers, including Dreher and The Hotel Group's chief executive and his wife, visited Billings last week to analyze the Sheraton's potential.

Remodeling will include upgrading the mechanical systems in the 22-story hotel, which opened in 1980.

The changes are extensive enough for Dreher to call them a "transformational renovation."

Guest rooms will be fully remodeled, including fixtures and furniture. The public spaces will be redesigned, including a larger coffee bar in the lobby and moving some food and beverage services downstairs.

The brick exterior will be upgraded as well.

Employees who had to reapply for their jobs during last year's foreclosure, will find the company is open and accessible, Dreher said.

"We don't have busloads of new employees to come in and take over the property," he said. "Generally speaking, employees who want to be reemployed, we take them through the status change."

The Sheraton has had several ownership changes through its life and went through foreclosure in 1987.

In March 2005, lenders foreclosed on four hotels, two in Montana, one in Colorado and one in Texas. The Montana properties were profitable, but not the other two. Because all four were wrapped into a single mortgage, they shared a similar fate.

The owners, Larken Inc. of Iowa and Nationwide Hospitality Limited Partnership of Delaware, failed to pay on a $24 million mortgage used to finance the four hotels.

So the lenders, Nomura Asset Securities Corp. and LaSalle Bank National Association, foreclosed.

Since them, Sage Hospitality Resources has managed the Billings Sheraton Hotel and the Holiday Inn Parkside in Missoula.

The sale price was not disclosed, and Dreher kept emphasizing another key point.

"It still is under contract, it's not a done deal," he said.

The Hotel Group has done business in Montana before.

For a few years in the early 1990s, it managed the Radisson Northern Hotel and the War Bonnet Inn in Butte, now called the Red Lion Hotel.

In 2002, The Hotel Group opened the Hampton Inn in Helena and operated it until that property was sold.

After the Sheraton sale is finalized, renovations in the hotel will take a year and a half.

"Our vision is to become the premier hotel in Montana and be more of a destination property for associations, as well as local and state clients," Dreher said.

Contact Jan Falstad at jfalstad@billingsgazette.com or at 657-1306.

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