CLIENT

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The Marcus Whitman Hotel is the “Grand Dame” of southeastern Washington, located in the heart of Walla Walla, WA, a region three times named America’s best wine region by readers of USA Today. First built in 1928, this architectural treasure offers 133 guest rooms and 13,000 square feet of meeting space. It has hosted US Presidents, celebrities, and dignitaries, and was named Hotel of the Year by the Washington State Wine Commission.

 

In 1999, entrepreneur Kyle Mussman purchased the property and completed a “basement through penthouse” renovation that included the addition of the largest ballroom in southeastern Washington. The hotel reopened in 2001 to great acclaim and has played an important role in Walla Walla’s growing tourism market ever since. The property has undergone several additional renovations, ensuring guests continue to experience modern amenities within the hotel’s historic charm. Beloved by the Walla Walla community, the hotel still stands, as it did in 1928, as the tallest building in Walla Walla, protected by a long-standing city ordinance requiring no building be taller.

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CHALLENGE

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Kyle Mussman enjoyed stewarding the hotel over two decades but had set a goal to retire by 2023. After investing tens of millions of dollars and a significant portion of his professional life in the property, Kyle wanted the next owner of this iconic property to share his appreciation for its historic charm and his commitment to serve the hospitality needs of Walla Walla for future generations.

 

As the largest hotel in the region with significant meeting space and two onsite dining outlets that support award winning culinary experiences, it was important to find a new owner who had not just the capital, but the proven hospitality experience to manage a property of this size and scope. It was equally important to find a new owner with the financial resources to not only purchase the property, but who was ready and capable to make significant future investments to unlock additional potential of the operation.

 

Adding additional complexity was the client’s need for absolute confidentiality during the sale and marketing process. The Marcus Whitman is an integral part of the Walla Walla community and has substantial meetings and conventions booked for future years that could be in jeopardy to actualize should it be known that a change of ownership was being explored. The Marcus Whitman Hotel also employs a large staff and keeping the process confidential was critical to retention.

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PROCESS

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Kyle Mussman selected METIS for their industry connections, hospitality experience, and track record for maintaining confidentiality to exclusively and discretely market the Marcus Whitman Hotel for sale.  The METIS team began a deep dive into the hotel financials and an extensive evaluation of the operations of the property. While the hotel had achieved consistently strong financial results, the METIS team spent considerable time developing financial models that showed how future strategic capital investment and key operational adjustments could increase the utilization of the property and potentially unlock even greater financial returns.

These models allowed investors to see the strong financial return potential of the acquisition as well as the return on associated operational optimizations and further capital investment.

 

While there was a diverse buyer pool for the property, METIS knew of an ideal operator already familiar with the area. The METIS team discretely contacted John Oppenheimer and Chuck Hill of Columbia Hospitality under a non-disclosure agreement, inviting them to consider an opportunity to expand their hotel operations in Walla Walla, which already included the Finch Hotel and The Inn at Abeja.  After several meetings between METIS and Columbia Hospitality where the financial models were reviewed in detail and confidential site tours of the property occurred, Columbia Hospitality quickly determined adding the Marcus Whitman Hotel to its portfolio represented an incredible investment opportunity that would additionally offer operational efficiencies by having three substantial hospitality assets under management in Walla Walla.

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OUTCOME

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Working with the METIS team, Columbia Hospitality quickly worked to bring together a pool of investors to acquire the property. Between Columbia Hospitality’s strong track record of property management throughout the northwest, the iconic nature of the property, and the detailed financial models showing strong investment returns, it was easy for prospective investors to determine the property would be professionally and profitably managed. A group of local and regional investors came together quickly.  Kyle Mussman himself liked the plan so much, he also chose to participate as an investor, retaining some interest in the hotel, while comfortably handing off the management to Columbia Hospitality.  

 

The diligence and closing timeline were both short for a property of this scale.  METIS stayed involved throughout the diligence process and ensured the transaction closed on schedule, December 30th, 2022. The new ownership group has designs already underway for significant upgrades to the property. These investments will ensure the Marcus Whitman Hotel remains the landmark hotel in southeastern Washington for many years to come.