Bret Wirta, owner of the Holiday Inn Express & Suites, 1441 E. Washington St., is looking to maintain his ownership of the 10-year-old hotel by filing for chapter 11 bankruptcy.
His attorneys filed Sept. 18 in the U.S. Bankruptcy Court Western District of Washington with their first hearing held on Sept. 28.
In an interview, Wirta — a Ballard resident who owns and operates Wirta Hotels 3, LLC with his wife Patricia “Trisha” Wirta — said they are seeking to pause payments and restructure the mortgage following the economic impact caused by the COVID-19 pandemic.
“Everyone is experiencing the pandemic in different ways,” he said. “For the year, we’ve lost about one-third of our revenue, maybe a little more (for the hotel).”
Wirta said his other properties — the neighboring Black Bear Diner, 1471 E. Washington St., and Quality Inn & Suites at Olympic National Park, 134 River Road — have been impacted similarly. Wirta said he’s in discussions with their lending banks about mortgage payments and doesn’t face potentially losing them like the Holiday Inn.
“There are a lot of businesses in our position,” Wirta said.
According to court documents, he owes Holiday Inn’s lending bank, Wilmington Trust, National Association, about $575,000 in claims.
Wirta said that about a month ago bank representatives placed a notice on the hotel’s doors that there was going to be a receiver, a new operator, put in place for the company. That prompted him to seek chapter 11 bankruptcy.
“My wife Trisha and I decided to do our best to get them to pause,” he said. “We felt chapter 11 bankruptcy was the best thing for us and the community.”
Attorney John S. Kaplan represents the bank that is trustee for a Citigroup Commercial Mortgage Trust, and he contests multiple points made by Wirta and his attorneys, including the impact of new operators of the hotel, and Wirta’s ability to pay.
According to court documents, Kaplan said Wirta’s phrase that a new operator would be “devastating” is incorrect because the proposed company, GF Hotels and Resorts, operates 21 similar hotels within the InterContinential Hotels Group (IHG) that holds the Holiday Inn Express franchise.
Kaplan added that Wirta has “sufficient cash to make the required debt service payments to (the bank), but chose not to do so.”
In court documents, Kaplan states that Wirta has about $811,226 in cash available that could be used to make a monthly debt service of about $46,880.
Wirta said he lost money throughout the winter and they need the bank to agree for them to skip a few payments in the spring to pay them in the future.
“That being said we have money in the account ready to make payments and would make these payments tomorrow but the bank refuses to negotiate, all while unilaterally attempting to foreclose and put a receiver in place,” he said.
“We believe seizing our hotel is an unfair solution, to put it mildly, especially since all of this was due to the worldwide pandemic.”
Kaplan also states that Wirta doesn’t plan to pay with his own money for a planned property improvement plan (PIP) estimated at $1.5 million to update the hotel as part of the franchise’s requirement by May 31, 2022.
Wirta said his plan through federal court will be similar to what he proposed to the bank to pause payment and add them to the end of the loan.
“We’re not redoing terms or protection; all we’re asking for is an extension,” he said.
The next hearing is tentatively set for Oct. 22.
As Wirta awaits a decision from the court, staff continue to say visitations are growing.
Namaste Cousins, the Holiday Inn Express general manager, said they’ve been at about 90 percent of capacity since June compared to their lowest total in April at 15 percent of revenue projections.
She said they have 29 employees (20 full-time at the hotel now) compared to 49 last year.
Wirta’s company received between $150,000-$350,000 through the federal Paycheck Protection Program to support 28 jobs.
“Big thanks to the taxpayers because that helped get us through,” Wirta said. “While we’ve been hurt, we’re doing OK. We’re coming back, and that’s wonderful.”
Cousins said they’ve listened to visitors to hear what makes them comfortable during the pandemic. Inside rooms, staff removed difficult to clean items, such as throw pillows, notepads and phone books. Towels are limited and even though bedding and towels may be unused they are cleaned after each stay. Items like coffee cups and coffee pods are thrown away regardless of use, too.
Cousins helped develop a “housekeeping menu” for visitors staying more than one night where they can check needed items for housekeepers to leave hanging on the door or, if OK with the resident, inside a room. She said IHG is looking to adopt the model as well.
Sequim’s Holiday Inn Express is the only one in the franchise Cousins knows of that serves a full, hot breakfast with staff cooking and serving meals to visitors. Other hotels only offer cold grab-and-go items, she said.
For more information on the hotel, call 360-681-8756 or visit ihg.com.