CHAPEL HILL - CHAPEL HILL -- A Morrisville company bought The Siena Hotel and its popular restaurant, Il Palio -- the second hospitality deal this month to indicate faith in downtown Chapel Hill, if not continued strain in the credit markets.

Aanika Hotels on Wednesday paid Triangle real estate veteran Sam Longiotti and his family $7.3 million for the 79-room inn and restaurant at 1505 E. Franklin St.

The price was about 9 percent below the Siena's tax value. The hotel likely would have fetched much more before the economic downturn sapped consumer and business travel, hurting hotel revenue.

Through the end of May, average occupancy in Chapel Hill-area hotels hit a seven-year low, according to Smith Travel Research. Revenue per available room in the area is down 15 percent compared to the same period last year. Boutique hotels in particular have struggled as those who still travel economize.

Meanwhile, the credit crisis has made it harder for investors to finance real estate deals. Fewer buyers and lower revenue usually translates to lower prices.

Aanika was able to pay cash for the Siena using proceeds from previous investments. The company plans to spend up to $3 million on interior improvements -- new televisions, better computer connectivity, ritzier bathrooms -- over the next year. "The property needs improvement, and it needed a capital infusion," said Prateek Chandak, 31, the majority partner in Aanika.

Chandak, a UNC-Chapel Hill graduate, was attracted to the hotel in part because of its proximity to the university. He bought it in a partnership with his father, Govind Chandak, who sold a portfolio of Southeastern hotels in the late 1990s. Together, they also own Morrisville's Prime Outlets.

Longiotti, who also developed Crabtree Valley Mall in Raleigh, developed the Siena in the late 1980s. He wanted to sell the property as part of a retirement plan, said Carole Marcusse-Sell, a spokeswoman at Plaza Associates, the Raleigh company that represented Longiotti in the deal.

Longiotti made the hotel and its restaurant into institutions that "helped put Chapel Hill on the map," said Laurie Paolicelli, executive director of the Chapel Hill/Orange County Visitors Bureau.

"It's very much a part of the Chapel Hill brand," she said.

The deal comes less than two weeks after Wintergreen Hospitality bought The Franklin Hotel, which opened in 2006 as a rival to the Siena. Wintergreen, which paid $14 million for the 67-room boutique hotel at 311 W. Franklin St., assumed about $10 million in debt as part of that deal, property records show.