There may finally be a buyer — for $12 million — of the troubled Shilo Inn on Newport’s oceanfront

By JEFF MANNING/Lincoln Chronicle

Portland hotelier Ganesh Sonpatki has emerged as the likely buyer of the run-down and largely vacant Shilo Inn on Newport’s oceanfront.

Sonpatki has agreed to pay $12 million for the 179-room motel. He submitted the winning bid for the hotel in October, according to federal bankruptcy court documents. But neither his bid nor his identity were disclosed until additional documents were submitted this month.

The sale must still be blessed by a bankruptcy court judge.

Sonpatki did not return phone calls from the Lincoln Chronicle seeking comment.

Hotel broker Brian Resendez of Portland said Sonpatki worked his way up from the bottom rung of the industry to owner of his own chain.

“He’s a shrewd judge of properties,” Resendez said. “He’s always looking for a good deal.”

The tentative deal marks another step in what appears to be the final dissolution of Mark Hemstreet’s 47-motel Shilo empire. A bankruptcy trustee took possession of many of the Shilo properties, including the Newport hotel. That trustee has been busy negotiating the sale of some of the hotels and closing down others. Shilo Inns in Bend and Warrenton closed in late January.

Hemstreet and Shilo got into legal trouble with creditors and the state of Oregon when it failed to pay some of its debt and its taxes. As of 2023, Hemstreet owed $3.9 million in back taxes, according to the Oregon Department of Revenue.

The Shilo is one of the largest hotels in Newport with 179 rooms on 2.48 oceanfront acres along Southwest Elizabeth Street in the popular Nye Beach neighborhood.

Bankruptcy court documents say the Shilo Newport owes $534,707 in back taxes to Lincoln County and more than $230,120 to the city of Newport for unpaid transient lodging taxes.

Sonpatki has built a sizable hospitality company of his own, mostly economy units in Portland. His companies own and operate several Value Inns around the Portland area. However, his ambitious renovation of a dilapidated 1882 building in Portland’s Old Town into a boutique hotel – dubbed the Harlow – won awards from historic preservation groups.

With the Shilo in Newport, he’s got his hands full. It has suffered years of neglect. Newport fire department officials ordered the closure of the largest of the complex’s four buildings due to problems with the fire alarm and suppression system.

“I’ve toured that property and it needs everything,” Resendez said.

• Jeff Manning is a former investigative reporter for The Oregonian who now writes for various Northwest publications and can be reached at [email protected]