Amerihost Uses Local Banks To Finance Midwest Hotels

CHICAGO - When the big Illinois hotel company Amerihost Properties needs construction financing, it turns to local community banks, not its big-bank credit facility.

Amerihost, which owns, builds, and manages bare-bones hotels, has used local banks to finance many of the 59 it has built in smaller markets throughout 13 states.

"I think it's very unique, considering that most of the franchise and large hotel chains have lines of credit from metropolitan areas for financing," said Dick Conklin, senior vice president of $137 million-asset Liberty National Bank, Kenton, Ohio, which is helping to finance a new $2 million Amerihost Inn there.

"They interact with the private sector to get to know the community," Mr. Conklin said. "They get the backing of the community and work with local investors to buy limited partnerships."

Amerihost, based in the Chicago suburb of Des Plaines, built its first hotel in 1987. It has built them for companies including Days Inn and Holiday Inn.

Its emphasis now is on ownership or significant equity participation in the properties it develops and manages, and it is expanding its own Amerihost Inn-brand hotel.

Michael P. Holtz, Amerihost's president and chief executive, said 12 hotels are open and 18 more are in the works.

The company uses the Illinois subsidiary of Michigan's First of America Bank for its corporate accounts and for financing a few hotels each year. But because Amerihost's niche is the Midwest, it has opted to go local for many of the hotel loans, which average about $1.7 million.

The company's niche is smaller towns that have several "demand generators," including colleges, outlet malls, and amusement parks, said Mr. Holtz.

Using local financing "helps us develop relationships in those towns right away," Mr. Holtz said. Because it's often a newcomer in town, gaining the confidence of the local banker is one of the hardest things for Amerihost to accomplish.

In Brookport, Ill., the company won over $21 million-asset Downstate National Bank, which is helping to finance a $1.7 million Amerihost hotel project in Murray, Ky.

The bank's first loan to Amerihost was financing about $2.5 million for a hotel near the Players Riverboat Casino in Metropolis, Ill.

"In many cases on large development projects, the financing's already in place," said David J. Emerson, chairman and president of Downstate National. "For country banks in rural America this is a nice way to get involved in local business opportunities. I can't think of any disadvantages."

Mr. Holtz said that the main drawback to financing through many institutions is that "we'd be able to move a lot quicker if we had one bank."

But he maintains the relationships are worth it.

"Long-term, I think it's good to have the loans in the local community," he said. "It helps us get that foothold."

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