NEW YORK—Most global hotel brands, looking to build a foothold in the key U.S. market, are eager to acquire a trophy luxury property in Manhattan. London-based Dorchester Collection had one such well-located hotel—the 899-room New York Palace on Madison Ave. & 50th St.—sold it and is now searching for a replacement.
In the meantime, it continues to seek luxury acquisitions in major U.S. gateway cities as well as New York. And to ensure that its remaining nine-property portfolio in Greater London, Los Angeles, Paris, Milan and Geneva stays in first-class shape, the Collection has major renovation projects underway at the eponymous Dorchester in London and the Le Meurice in Paris, among others.
“New York is still high up on our list of locations we’d like to be in. In fact, it’s a top priority,” CEO Christopher Cowdray told Hotel Business recently during a visit to New York. “But we’d like our flag here to be more in keeping with the profile of the Dorchester brand overall. The Palace is an excellent hotel, but with almost 900 rooms, it’s difficult to deliver the kind of true luxury service in a property that large.
“Most of the hotels in the Collection have closer to 200 keys,” Cowdray added.
The 31-year-old Palace was sold 15 months ago by an entity associated with the royal family of Brunei to Northwood Investors, LLC, for an estimated $400 million. The royal
amily of Brunei, entities of which also control the Dorchester Collection, had acquired the hotel in 1993 for roughly $200 million.
Asked what other U.S. cities Dorchester Collection has targeted for expansion, Cowdray singled out two: Washington, DC and Miami.
Internationally, Dorchester—like other luxury global brands—has cast its eye on growth possibilities in Asia. “We certainly have interest in that part of the world, including key cities like Shanghai, Tokyo, Singapore and Hong Kong. As the economies in Asia continue to grow, there will be more luxury travelers to stay at our hotels. They will come from within Asia and Europe, as well as North America,” explained Cowdray, who has been CEO since 2007.
Zeroing in on the China market, he remarked on the growing potential for both inbound and outbound travel. “We’re hoping to see travelers from China booking our hotels elsewhere in the world. They already do, but it’s going to be a much larger market in the future,” he said.
Going forward, Dorchester Collection’s underlying business model is changing. Traditionally, an owner/manager, that is, managing properties owned by its owner, Cowdray said there’s now interest in pursuing third-party management deals as well. The first such deal, which took effect a year ago, added Geneva’s 109-room Le Richemond Hotel to the Dorchester Collection portfolio.
“We’re very much looking at third-party management agreements. If we can’t acquire a hotel in a certain desirable market, for example, and there is an owner looking for an upscale operator to run the hotel, we would certainly consider the opportunity,” Cowdray explained.
In building the Collection further, Cowdray and his team would be open to new construction and adaptive reuse projects, as well as conversions of existing hotels. “It just depends on the situation. Existing hotels need to have some iconic value to them or the potential for that in the future. If we can find historic buildings or historic hotels that can be restored, that would be ideal. But we’re interested in new buildings as well,” Cowdray added.
Upgrades at The Dorchester include the addition of 22 refurbished suites that range in size from one to three bedrooms. According to Cowdray, New York-based interior designer Alexandra Champalimaud found just the right balance between a classic British style and a lighter, more contemporary feel.
At Le Meurice, meanwhile, the full-service Valmont Spa has closed for a complete makeover, while a new private dining room with seating for up to eight people is scheduled to open this fall. Both projects come on the heels of a guestroom renovation that was overseen by Paris-based designer Charles Jouffre.
In terms of bookings going forward, Cowdray said he is optimistic for the second half of 2012. “Overall, the luxury market is doing quite well, in London and Paris especially, despite concerns about the economy in other parts of Europe,” he said.
One lesson learned from the 2008-2010 industry downturn has been the need to continue to provide appropriate levels of service. “One thing you never want to do at the luxury tier is compromise your standards,” Cowdray advised.
“Once you do that, you risk losing the confidence of your guest and it can be hard to regain that,” he concluded.