RALEIGH—The Sheraton Chapel Hill Hotel has new owners with big plans to renovate the hotel, once one of the area's most luxurious.

The 168-room hotel off U.S. 15-501 was bought Wednesday by Soleil Group of Cary, which plans to make the Crabtree Sheraton in Raleigh a luxury Westin. It plans to spend $3.5 million to $4 million on the Chapel Hill hotel, upgrading rooms, meeting space and the lobby. The rooms will get flat-screen plasma televisions.

“The reason we're buying it is, it's very hard to build anything in Chapel Hill, and when we're through renovating, we believe it will compete with the Siena or Carolina Inn,” said Sanjay Mundra, who with partner Dicky Walia owns Soleil Group.

The Siena Hotel and the Carolina Inn are the only luxury hotels in Orange County with a four-diamond rating from AAA, the auto club. Average nightly room rates are $165 at the 84-room Siena and $155 at the 184-room Carolina Inn.

Average daily rates at the Sheraton, which has a three-diamond rating, are $120. Soleil plans to raise rates to $140, Mundra said. The renovation could earn the hotel a four-diamond rating, he said.

The Sheraton Chapel Hill, at One Europa Drive, is popular with out-of-town guests and local groups who make use of its 16,000 square feet of convention space, said Patty Griffin, the bureau's communications manager.

Soleil bought the Sheraton from Starwood Hotels & Resorts, which has owned it since 1995. Mundra declined to name a purchase price but the hotel and 5 acres of land have a tax value of $11,297,319, according to Orange County tax records.

When it opened in 1981 as the Hotel Europa, its Dutch owners, Clingendael Investment Corp., put the hotel's cost at $15.1 million. They used white Italian marble for the lobby floors and placed local artwork throughout. Guests have included singers David Bowie and Lionel Richie, basketball stars Kareem Abdul-Jabbar, comedians Eddie Murphy and Bill Murray, and Queen Noor Al Hussein of Jordan.

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