Office developer expanding to hotels

Basin Street Properties, the Petaluma office park developer that built the core of Sonoma County's Telecom Valley, is getting into the hotel business.

Basin Street is forming a new company with plans to build or acquire more than a dozen hotels over the next several years.

The developer has started construction on a Hampton Inn & Suites hotel in Windsor and will soon start another Hampton hotel in Suisun City in Solano County. Basin Street already owns a Holiday Inn Express in Corning, above Sacramento.

Its new hotel development and management company, Basin Street Hospitality, is a partnership between Basin Street Properties and the Sonoma Mountain Group, which manages the Sheraton Petaluma Hotel.

"It's something I wanted to get into for a long time. We're looking to grow this thing to 15 to 20 hotels over the next three to five years," said Matt White, president and chief executive for Basin Street Properties.

White leads the development side. Tom Birdsall, president of Sonoma Mountain Group, will oversee management of the properties.

The partnership provides Basin Street Properties and the Sonoma Mountain Group with equal ownership shares in the Corning, Windsor and Suisun City hotels.

Basin Street's move comes two years after it sold most of its Sonoma County office buildings to Equity Office Properties Trust for $263 million -- the largest commercial real estate acquisition in the county's history.

With that capital in hand, the company is developing or acquiring office properties in Sonoma County and the Sacramento, Reno and Portland areas.

Its hotels will be located in the same regions, part of a strategy to serve Wine Country tourists and market lodging services to its business tenants.

The new Windsor hotel, for instance, is a mile from the massive Airport Business Center.

"I enjoy the challenge of trying to make the business traveler happy," White said.

"It's very similar to what we do today with our tenants. The only difference is the hotel guest is staying for one to five nights and your office tenant is staying one to five years," he said. "It can be more challenging because you have a lot less time to meet their needs."

Birdsall was a lodging industry novice when brought in to oversee management of the Sheraton, where RIM Hospitality handles day-to-day operations. But the longtime environmental consultant said the hotel has nearly doubled occupancy over the last four years.

"Now we're one of the top Sheratons in North America in terms of guest satisfaction," Birdsall said.

RIM Hospitality will operate the Windsor and Suisun City hotels and likely will be brought in as Basin Street Hospitality expands its holdings, Birdsall said.

Operating hotels with a brand name offers some advantages that should help make the properties profitable, White said.

Basin Street will be able to purchase hotel furnishings at a discount from Hilton, which owns the Hampton brand.

The hotel development company will be able to link its hotels to Hampton's reservation system, which can direct frequent travelers to its properties.

Basin Street purchased the Corning hotel nearly two years ago for $5.5 million.

Construction of the Windsor hotel began in June and should be completed in 13 months at a total cost of $15 million.

The Suisun City project is expected to begin in three months and should be finished by the end of next year at a total cost of $13 million.

"We think there are a lot of opportunities to acquire or build properties and turn them into first-rate hotels," Birdsall said.

You can reach Staff Writer

Michael Coit at 521-5470 or mike.coit@pressdemocrat.com.