- Lender foreclosed on Hotel Bel-Aire mortgage in mid-March and filed for emergency receivership
- Erie County Judge Daniel Brabender appointed Receiver April 6
- The Schwab family, owners of the hotel, no longer operate under receivership; possible sale included in court approved plan
The Bel-Aire Hotel in Millcreek Township, long a mainstay of Erie’s hospitality industry, is no longer under local control and may be in the process of finding a new owner.
The financial fallout from the pandemic and other factors forced the complex into court-approved receivership, an outside management company managing day-to-day operations and collecting the revenue.
The receiver is also authorized to market and sell the property and to terminate current employees, according to files filed in Erie County Court.
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The purpose, according to the records, is to keep the Bel-Aire, at 2800 W. Eighth St., near Peninsula Drive, in order to preserve the business and property for the benefit of the lender who holds the mortgage. Operations include the hotel’s 131 rooms, swimming pool and restaurant, called Maxi’s.
New York lender HDDA LLC, which specializes in hotel real estate, seized Bel-Aire’s mortgage on March 17 due to the non-payment of $ 6.1 million in loans, according to court records. HDDA has said in court filing that without outside oversight the property is at risk of further financial damage, including a tax sale.
Bel-Aire owner Kertra Ltd. owes $ 226,942 in back taxes from 2019 property taxes, according to Erie County assessment records.
HDDA also said in its file that Kertra, whose owner and chairman is Fairview resident Kerry Schwab, had consented to the appointment of a mortgage default receiver, under the terms of the loan documents.
âA receiver is desperately needed to manage and maintain the mortgaged property and to collect all rents, issues and profits,â HDDA said in an emergency petition for the appointment of a receiver, filed March 30. effect of COVID on the hospitality industry, requires the appointment of a receiver on an expedited basis. “
In an accompanying dossier, HDDA said it was also unclear on Bel-Aire’s franchisee status. The hotel was last known to be affiliated with Ramada by Wyndham, which still lists Bel-Aire as a franchisee on the hotel’s website. The uncertainty surrounding Bel-Aire’s future is another reason a receiver is warranted, HDAA said in the filing.
âThe loans are in default and have not been repaid,â HDDA said. “The defendant has stopped paying taxes and hundreds of thousands of dollars in tax liens have been filed against the property. The franchise flag’s status of the property is unknown and is in danger. Legal intervention is required.”
On April 6, Erie County Judge Daniel Brabender approved the receiver’s appointment. At the request of HDDA, the receiver is Marshall Hotel & Resorts Inc., of Salisbury, Maryland, “an experienced receiver and property manager in the hospitality industry,” said HDDA in its request for receiver. The receivership fee is $ 5,000 per month, according to Brabender’s order.
The receivership took effect on April 12.
Schwab, the boss of Kertra, the owner of the Bel-Aire, did not respond to a request for comment. Kerta’s attorney Nicholas Pagliari declined to comment.
Marshall Hotel & Resorts, as receiver, “will provide consistent management and operating services” with similar hotels in western Pennsylvania, according to Brabender’s order. The receiver is empowered to terminate employees and market and Bel-Aire property “and enter into a transaction for the sale” of the property with the approval of HDDA, according to the ordinance.
Long local connection
The receivership and eventual sale of the Bel-Aire signifies the end of local ownership of the popular resort. Kerry Schwab and her father, Clem Schwab, opened Bel-Aire in 1983, drawing business travelers and vacationers to nearby Presque Isle State Park.
The Schwabs have updated the Bel-Aire periodically, although the COVID-19 outbreak has brought challenges that have damaged the hospitality industry across the country. At the end of 2018 and early 2019, the Bel-Aire, then the Bel-Aire Clarion hotel, underwent renovations of $ 2 million.
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Around this time, the hotel also changed its affiliation from Clarion to Wyndham, although the Bell-Aire remained independently owned. The independent relationship has allowed Bel-Aire to retain many of the boutique hotel characteristics while enjoying the benefits of a brand.
Renovations have upgraded the Bel-Aire’s Regency Ballroom, Maxi Restaurant, Atrium Pool, and guest rooms. The Bel-Aire also received all new furniture, rugs, wallpapers, artwork and a new paint scheme.
This was the hotel’s first large-scale renovation project in the past 10 years, although Kerry Schwab said he had done smaller repairs in the past. He said the Bel-Aire needed to get upgrades to compete with newer hotels in the area.
âObviously I’ve had it for a long time and felt it was time we went through this renovation program and spent the money to update it,â Schwab said in an interview with Erie. Times-News in January 2019. “We will have a brand new facility as the entire property is undergoing renovations.”
Schwab said Bel-Aire’s remaining business clientele continued to decline with the opening of new hotels in the area. He said the chain’s hotels have more money to do constant repairs, and technology has made it easier for travelers to compare rates and book rooms.
Despite the challenges, Schwab said in January 2019, the Bel-Aire remained a popular location for weddings, meetings, lunches, and other gatherings.
âWe’re all sitting there saying, ‘How do we separate ourselves from everyone else?’ he said. “” What is our niche? What is somebody else not doing? For us, it is because we are a family business.