MacArthur Place parent company emerges from bankruptcy

All hotels have faced a difficult business environment during the COVID-19 pandemic including forced closures throughout 2020 ‒ but the parent company of the MacArthur Place Hotel and Spa in Sonoma has endured a particularly tumultuous year.

Arizona-based IMH Financial Group purchased the 64-guest-room hotel for $36 million in late 2017 from an ownership group that included Suzanne Brangham, Bill Blum and others.

The hotel property, located at the corner of Broadway and MacArthur Street, is currently a wholly- and privately-owned subsidiary of IMH, and the company’s primary income-producing asset. IMH entered bankruptcy protection in July, 2020 and emerged in November that year as a wholly-owned subsidiary of JPMorgan Chase & Co.

With the financial reorganization behind it, the IMH team is optimistic about the future. MacArthur Place Hotel and its flagship Layla restaurant reopened this week, renovations to the hotel pool and spa will soon begin and the resort’s management team took the very first steps this week toward adding additional guest rooms on the 5-acre property.

A major investment in the property

Since acquiring the property, IMH has invested $25 million on renovations to all of its guest rooms, completely revamped its restaurant, redesigned its hotel bar, and added a new coffee bar and marketplace called Porch.

“We have invested a lot of money, renovating every aspect of the resort except the spa and pool, and that’s what we’re focusing on next,” IMH CEO Chad Parson told the Index-Tribune last week. “The next phase of our renovations will enable us to offer state-of-the art spa services.” Parsons expects the spa and pool remodel to start in late 2021.

Local investors made whole

As part of the bankruptcy restructuring, IMH took MacArthur Place private and bought out all of its investors.

“We emerged successfully with a plan supported by 99 percent of our shareholders in the hotel investment fund,” Parson said. The individual investors in MacArthur Place, dozens of whom were Sonoma locals, held preferred stock that was linked specifically to MacArthur Place. Those investors were paid back in full in the fourth quarter of 2020 with all dividend payments made, according to Parson.

What’s next for MacArthur Place?

Both Layla and the hotel itself reopened in the past week.

“We spent weeks and weeks almost entirely revamping our food and beverage offerings,” said IMH Hospitality EVP Greg Hanss, noting that Spencer Wolff has taken over the food and beverage leadership and that former General Manager Ruben Cambero has left the company for other opportunities. “We are incredibly excited about welcoming the community back and showing off the changes.”

In addition to an all-new menu, Layla is sporting a huge new clear tented area which will enable the restaurant to seat more guests during inclement weather.

MacArthur Place management this week also appeared before the Sonoma City Council in the first step toward a possible amendment of the hotel’s existing use permit to add 11 new guestrooms to be located in five new buildings on the property.

Agenda Report - MacArthurPlaceCityCouncil - Pdf.pdf

How is it that IMH can continue to invest in MacArthur Place in such a tough economic climate? Parson sees it as a crucial component to the hotel’s business strategy.

The spa and pool renovations were part of the original vision of resort renovations planned after the acquisition, he said. As for additional guest rooms, Parson said the space is there and the appearance before the City Council is just an early exploration into the feasibility of expansion.

“Having added capacity will allow the resort to become more profitable,” Parson said. “At 64 rooms, we’re a little on the small side and it’s difficult to compete in certain event businesses at our current size. We are considering growing modestly so we can better compete and better position the hotel.”

Parson expects the process to be a slow and thorough one.

“It’s just the very first step in a process we know will take a long time,” he said. “But exploring the option is an important part of our future business strategy for the property.”

Contact Lorna at lorna.sheridan@sonomanews.com.