Hotel changes management

SHEFFIELD - A federal judge has appointed a hotel management company to take over operations at Holiday Inn in Sheffield.

The decision was made by Lynwood Smith, a U.S. district judge for the Northern District of Alabama, and adds stability to the financially troubled hotel. The old operators of the hotel, Portfolio Sheffield, have been accused of failing to pay taxes in a timely manner, prompting the city to terminate its lease with the company.

The hotel has continued to operate despite having utilities shut off twice after the company failed to pay its bill.

Sheffield City Clerk Clayton Kelly said Prism Hotels and Resorts is now managing the hotel and is in the process of paying the hotel's outstanding debts.

Kelly said the judge acted on a request from Wells Fargo Bank, which holds the mortgage to the hotel's long-term lease.

Sheffield owns the property and hotel building, which gave the city authority to terminate the lease.

The action was hammered out between attorneys for Wells Fargo Bank and Sheffield.

Kelly said the judge's decision is good for Wells Fargo and the city.

He said Prism Hotel and Resorts is in the process of determining the extent of the hotel's outstanding debt and will be paying that debt soon.

The hotel owes money to a variety of vendors, including the state of Alabama for past-due liquor taxes. Failing to pay those taxes resulted in the hotel losing its liquor license.

It's unclear if or when Prism Hotel and Resorts will re-apply for the liquor license.

"I have to believe that if they do it right, if they do what they're supposed to do, it will not take long for the hotel to get back to where it was," Kelly said.

Federal court records dated Oct. 15 state that Portfolio Sheffield was ordered to immediately surrender control of the facility to Prism Hotels and Resorts and allow them access to all books, records, accounts and documents relating to the facility's operation.

The court action will provide Prism Hotels and Resorts with financial incentives to manage the facility until a long-term solution can be negotiated.

Court records show Prism will receive $1,500 plus reasonable expenses for the first month it serves as receiver for the court.

That amount decreases to $1,000 for each month of operation thereafter.

The company will also receive money for managing the hotel and its debts. Prism will receive 2.5 percent of the gross monthly revenue generated by the hotel or $3,000, whichever is greater. The company also gets $1,500 per month to offset accounting fees, according to court records.

Prism must provide Wells Fargo and Sheffield officials with updated financial reports.

Bill Bensinger, a Birmingham attorney who represents Wells Fargo, declined comment about the case.

"This has been an exercise in frustration," Sheffield Mayor Billy Don Anderson said.

The mayor is optimistic about the prospect of the hotel's debts being paid now that Prism and Wells Fargo are involved.

Kevin Gallagher, senior vice president for Prism Hotels and Resorts, visited the hotel Wednesday to begin working with city officials and the liquor board.

"We're sorry that the hotel has struggled," Gallagher said.

"The staff of the hotel is delightful. We don't know anything about the past managers, and we are not interested."

Kronos has been accused of having accounting difficulties with its hotels nationwide. The issues have even spawned the Web site kronoshotelsllc.com, where people can share news reports, court filings and chat with former employees.

Gallagher said he was unsure how long it would take to clear up the problems at the Sheffield Holiday Inn, but it would likely take weeks or even months.

"We're coming in blind, so some things have been difficult to figure out," he said.

Prism rehired all prior staff members who are eligible for employment, workers who Gallagher described as "really friendly people who have been through tough times."

A regional vice president will oversee the Sheffield operations in the future, officials said.

Even with the new management in place, issues continue to surface.

Charles Thompson, who worked for Sheffield Holiday Inn, said no checks were available for the current pay period, which ended last Friday.

"I'm pretty sure there are some upset people," said Thompson, who quit two weeks ago and found other employment. "I'm really upset; I was depending on that. I don't know who I can talk to."

The pay period began while Portfolio Sheffield was still involved in the hotel, before the takeover by Prism.

Peter Mathon, a spokesman for Kronos Hotels, which acquired the Holiday Inn in June 2007, declined comment.

Russ Corey can be reached at 740-5738 or russ.corey@TimesDaily.com.

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