Local hotel operator buys former Omni in Newport News for $2.8 million

Published June 26, 2013 by Paula C. Squires

If Ray Patel gets his way, Newport News will soon be home to a renovated hotel with an addition and a $100 million, indoor water park similar to Great Wolf Lodge in Williamsburg.

Patel, head of JSK Motel Management, based in Chesapeake, purchased the 182-room Magnuson Hotel on nearly six acres for $2.8 million. The 33-year-old property, located off J. Clyde Morris Boulevard near Oyster Point, operated as an Omni until the end of 2012. Then it operated as a Magnuson Hotel, before falling into receivership early this year, Patel said. His company managed the hotel for four months, before purchasing it, he added.

“It is a very good buy,” he told Virginia Business. “You couldn’t build it for the money we picked it up for. It does require a lot of upgrades – a lot of the mechanicals are pretty old. It was built in 1980 as an Omni for $30 million,” he said.

Patel says he will spend $1 to $1.2 million to update the property’s mechanicals and rooms so it can compete in what is an oversupply of hotels in Southside Hampton Roads where the occupancy rate is about 55 percent. The hotel will remain open during the renovation.

What Patel says will make the property stand out is a 70,000-square-foot, indoor water project. It would be attached to a five-story, 300-room addition with a parking garage that he wants to build on the site, in front of the existing hotel. “We plan to do a full water park project like Great Wolf Lodge,” he said. “We’re in the preliminary drawing stages. The next stage is feasibility.”

Patel says the project, which could require a site rezoning, would create as many as 600 jobs. “It would take about 18 months to get it all together.”

JSK Motel Management currently operates four other hotels under the Studios & Suites 4 Less brand in Chesapeake and Virginia Beach. Patel said the newly purchased Newport News hotel is the firm’s largest property and brings the company’s total room count to 580.

John Wessling, a broker with S. L. Nusbaum Realty Co., who represented Patel in the transaction said, “I think Ray got a heck of a good deal.”

The Atlanta office of Jones Lang LaSalle represented the seller, Long Gate Associates LLC.