Sheffield Holiday Inn loses its franchise

SHEFFIELD - After 25 years as a Holiday Inn, the popular motel and revenue source for Sheffield lost its franchise Monday amid allegations of bounced workers' checks, unpaid utilities and lack of funds to purchase food for events, according to internal documents obtained by the TimesDaily.

On Monday, InterContinental Hotel Group, which owns the Holiday Inn chain, terminated its license agreement with the 202-room Sheffield hotel for nonpayments of franchise fees, according to documents obtained by the TimesDaily between Alicia Johnson, IHG franchise administrator, and Barbara Hall, general manager of the Sheffield hotel.

When a search was conducted at the Holiday Inn Web site on Tuesday, the Sheffield hotel had been removed.

The hotel, which employs about 70 people, was purchased by Kronos Hotels and Resorts, LLC out of Marietta, Ga., in June 2007.

The property's owner, attorney and spokesman said Wednesday that the loss of franchise was because of an accounting issue and that the hotel would be reinstated as a Holiday Inn today.

By the end of business day Tuesday, Caroline Sanfilipo, a spokeswoman for IHG, said she was unable to confirm that information.

A.J. Block, an Atlanta attorney who represents Kronos Hotels and Resorts, said there was a bookkeeping error, but late last week license fee money was wired to IHG and the Holiday Inn name was reinstated.

"It's an accounting error; it's already been fixed," said Charles Morais, who owns Kronos Hotels.

"We're renovating a property that hasn't been renovated for 10 years; we're going to make it a great property. Nobody's renovating in this market except us."

Kronos spent nearly $1 million in renovations to the hotel, said Kronos spokesman Peter Mathon.

According to Mathon, the operation of the hotel was not affected as behind-the-scenes negotiations were made between the Holiday Inn franchise and the Kronos company.

Mathon said he expected the franchise would be reinstated today.

"Basically, you're talking about payments," Mathon said. "This is quite normal in the hotel industry."

Several other payments, however, have faltered at the hotel, according to internal documents and officials. There have been problems with payroll, utilities and remittance of tax revenue.

"I think it's a bad situation for them," said Sheffield Mayor Billy Don Anderson. "They have been consistently slow in meeting their obligations. Based on the occupancy rate of this motel, I see no reason in the world why it couldn't meet its obligations."

Anderson said the hotel is up to date on its tax payments and utilities, but that taxes for July are due today. In early August, Sheffield Utilities threatened to disconnect services unless the hotel's bill of $32,397.20 was paid, according to internal documents.

"They caught up with any outstanding debt with the city and the utility department Thursday a week ago," Anderson said. He declined to specify the amount of tax revenue owed.

Internal documents indicate there are problems with payroll checks.

"I have several people whose checks have bounced," Hall, the general manager, wrote to Kronos owner Morais on Friday. "They are frustrated and ready to walk out. For some of the employees, their bank accounts are now

overdrawn."

By Monday, internal documents indicate that several more checks had bounced and that $3,000 had been received to cover $9,725.99 in bounced checks for 15 employees.

"To lose a flag at a full service property is terrible," said Susann Hamlin, executive director of the Colbert County Tourism & Convention Bureau. She said the property has maintained an occupancy rate above the state average.

"Holiday Inn is one of the strongest flags out there," Hamlin said, adding that Holiday Inn has had a presence in the Shoals for more than 40 years.

Hamlin said many travelers, especially business travelers, are "brand friendly" and use a hotel's rewards program when they travel.

Also Monday, the hotel was apparently unable to order food, according to internal documents, and the fax service was disconnected last week. Internal documents indicate that Morais was contacted about the problems.

Trevor Stokes can be reached at 740-5728 or trevor.stokes@TimesDaily.com.

Staff writer Russ Corey contributed to this report.