UPDATED: March 24, 2016 4:52 PM — Swedish-Russian hotel development and management group UMACO paid $4.3 million this week to buy the Eurotel Inn on Lee Road near Winter Park, its first property in the United States, and will apply its Russian brand Katerina in a thorough renovation, the company's president told GrowthSpotter.
Located at 830 Lee Road, the 1.76-acre parcel includes the five-story hotel built in 1985, with 145 keys spread across 67,550 square feet of net area. The property lies just west of an Interstate 4 exit with Lee Road, in a pocket of Orange County just outside Eatonville and Winter Park city limits.
Alexander Udalov, founder and president of UMACO Group, immigrated from Russia to Sweden in 1989 to raise three children and build a construction supply business. His family company grew, and in the late 1990s began to acquire and redevelop hotels in Russia with their own business class flag, Katerina, of which it now owns and manages three in Russia.
The group also developed their own property management and security software for hotel operations. Udalov's daughter, Katerina Cronstedt, introduced innovative new technologies to Russia's hotel management market, particularly digital tablets used by housekeeping staff that allow room inventory updates in real time. They also introduced the Russian hotel market's first free wifi and no-smoking policies.
Udalov saw success would be capped in Russia by the country's struggling economy and inflation, so in 2012 he visited the U.S. to explore expansion. New York and Los Angeles proved too expensive, and he settled in Miami with an investor's visa but couldn't find an affordable value-add property there, either.
"I then looked to Orlando, and realized right away there was value here," Udalov said Thursday, from the lobby of his new property. "It's record tourism numbers here, and the hotel market had many older properties with value-add opportunity at good locations, with large lots."
Udalov saw rare renovation potential in the Eurotel Inn due to its large central interior corridor, which facilitates room renovation and new technology installation. The building boasts steel and cement construction, so it's structurally sound.
Udalov and Cronstedt took over the property management this week, and will oversee an estimated $1 million in interior renovations this year. A new exterior sign with an Americanized version of the Katerina brand will be installed soon, along with an LED message board.
They're still seeking subcontractors that specialize in hotel room renovation, electrical, plumbing and HVAC. They'll also be hiring a new operations director and sales manager.
UMACO is developing two new brands that it has yet to launch in Russia or Europe, the business traveler-focused Katerina Infra, and Hotelean, a Scandinavian style that will boast environmentally friendly features and a budget-friendly price point.
The company could be in the market for more value-add hotel acquisition opportunities in Greater Orlando later this year, after the Lee Road property is stabilized and through renovation, Udalov said.
The seller and previous owner-operator Albert Segev, via affiliate Josefs Hospitality, had paid $1.2 million in April 2010. The property was closed at that time, and Segev invested more than $1 million in renovations before reopening in 2012.
Gary Michael, a local marketing and business consultant, had been helping Segev discretely market the property for sale since 2013.
"The challenge was finding a potential buyer who had the foresight to see that Lee Road and this area are changing for the better," he said. "The potential here right off I-4, minutes from Winter Park at a value price, and a great building structure offered great value."
Segev owns two other hotels in Orlando and Melbourne, and said Thursday he's eager to sell one or both so he can retire. He's been marketing those properties himself through hotel industry journals, thus far.
Udalov's buyer affiliate LLC took out a $3.3 million loan from the seller, which comes due in March 2020.