NEW YORK—After declaring its intentions to be more aggressive in expanding its portfolio, Loews Hotels & Resorts has been noticeably sticking to the program, not only acquiring hotels but also putting new-construction projects in the mix.
Most recently, Loews completed the acquisition of The Back Bay Hotel in Boston from The Doyle Collection. An adaptive reuse of the city’s police headquarters originally redeveloped by Jurys Doyle Hotel Group in 2004, the 225-room hotel “is a jewel box,” but one that’s been known as a
a non-descript property in the area, according to Loews Chief Investment Officer Troy Furbay.
“It has a lot of historic presence,” said Furbay of the 1920s building, noting the property has untapped potential. “I don’t think you could find a better location in Boston or in the Back Bay. I think we’ve found a little jewel that no one’s paid attention to.”
Loews intends to do a soft-goods renovation of the property, which, while maintaining its facade and some historic elements, was largely reinvented via new construction eight years ago.
“We’ll be adding some signature Loews pieces to it, doing some touches in the lobby and a big overhaul of the restaurant,” said Furbay.
The price of the acquisition, expected to close this month, was not disclosed.
The Boston property is the second acquisition move in as many months for Loews. In December, it agreed to buy the 356-room Madison Hotel in Washington, DC, from Jamestown Properties.
The 50-year-old property, located at 15th and M St., had been under management by Destination Hotels and Resorts for two years, which oversaw an approximately $23-million renovation that included the guestrooms, meeting space, the PostScript Café, The Lobby Bar and added The Federalist restaurant, now considered one of the city’s popular dining spots.
“We’ve been talking for a year now about the three ways that we’re going to grow in other markets. We’re going to continue to do the big-box, group-oriented hotels that Loews, frankly, is synonymous with and runs very well. What they hadn’t done a lot prior to now is smaller, transient-oriented hotels—200- to 300-room hotels that aren’t dependent on good meetings facilities like certain corporate-oriented hotels,” said Furbay.
Slightly more than a year ago when he came on board at Loews Hotels & Resorts as president/CEO, industry veteran Paul Whetsell said among the company’s goals would be to nearly double the existing portfolio of hotels to 30 within five years. By June 2012, the lodging chain acquired the 632-room Renaissance Hotel & Spa in Los Angeles from CIM Group, rebranding it the Loews Hollywood Hotel.
The 20-story property is the hotel component of Hollywood & Highland Center, a 460,000-sq.-ft., mixed-use development that features more than 80 retail outlets and also houses the Dolby Theatre, home to the entertainment industry’s Academy Awards presentation.
With an eye toward further enhancing its return on investment—including a phased $26-million renovation—and expansion goals, Loews opted to joint venture with MetLife in the ownership of the Hollywood property this past December.
Whetsell characterized MetLife, which owns the Loews Atlanta Hotel, as a “great partner as we invest in our portfolio and expand the Loews brand.”
Furbay said Loews in its expansion “would still buy and develop the group hotels, such as Hollywood that we bought last year, but we’re also going to go into markets with a corporate-oriented hotel that is smaller; that’s what Back Bay is, what Madison is. We’re also working on something in Toronto that’s going to be similar.”
Loews also will be putting its stamp on two new-construction properties: Universal’s Cabana Bay Beach Resort, set to open in 2014 in Orlando, FL, and the Loews Chicago Hotel, expected to open in 2015.
Loews already has three properties synced to Universal: Loews Royal Pacific Resort, Loews Portofino Bay Resort and the Hard Rock Hotel, which it manages. The new property is a joint venture between affiliates of Loews and Universal Parks and Resorts.
The property will offer 900 family suites and 900 standard guestrooms at moderate and value price points on a 37-acre site within Universal Orlando Resort and close to the theme park’s Islands of Adventure.
“What we and Universal realized is there’s a big, unaccommodated demand for the lower price point. The Hard Rock and the Portofino run upper-$200s average rate; the [larger]of the three resorts, Royal Pacific, is about a $50 discount to those two. Where we were leaving all of the unaccommodated demand was at the 3.5-star price; all of that business was going out to I-Drive,” said Furbay, who expected the hotels on International Drive to feel the impact of 1,800 rooms’ worth of new supply but did not foresee the supply cannibalizing Loews’ other Universal hotels.
All four properties will have synergies with operations such as laundry, food and beverage, reservations, accounting, human resources, etc.
Given Loews’ new presence in Los Angeles and proximity to the original Universal Studios, Furbay was asked if the lodging chain might add accommodations there.
“We have a tremendous relationship with Universal Studios in Orlando. Universal Hollywood is three miles from our Hollywood property and Universal has welcomed us with open arms to have a relationship with [its]park. We’re starting to do tie-ins with the park…I think that’s going to be a key part of our business going forward in Hollywood,” said Furbay. He added, “There’s really not an opportunity to build a park hotel there; the area around it is very residential. I think they would have years ago built a resort there if they could. As far as I’m aware Universal doesn’t have any plans to do that. I’d be surprised if that’s on their radar screen.” Both a Hilton and Sheraton are in the market on nearby Universal Hollywood Drive.
In the Windy City, Loews in two years expects to open a 400-room hotel being developed by Chicago-based DRW Trading Group, which, with Principal Don Wilson, owns the Hotel Jerome in Aspen, CO.
The property, designed by architectural firm Solomon Cordwell Buenz, will feature 25,000 sq. ft. of meeting space, including outdoor terraces; an outdoor rooftop pool; signature restaurant; and a spa and fitness center.
The hotel will occupy the lower floors of the 52-story building, which will incorporate a separate, 390-unit residential tower.
Furbay noted the hotel is being built across from the Sheraton Chicago Hotel and Towers. “So we’ll have not only a large, captured audience of residents to patronize the restaurant, but we’ll have a 1,200-room hotel across the street” whose guests offer potential for using the restaurant and booking rooms at another point, he said.
The hotel piece of the mixed-use project is coming out of the ground at $400,000 per key.
Another prong of Loews strategies concerns its 4.5-5-star offering, Loews Regency, which up until now had a single, flagship in New York City.
“We’re rebranding our Montreal property to Loews Regency Montreal and that will happen this year,” he explained. Furbay added that the goal is not to have a five-star physical plant. “We think that’s an expensive way to build and the service model is not efficient to run but we’ll have five-star amenities and five-star service levels,” he said, noting that the tiered move will allow Loews to go into markets with multiple properties.
Overall, Loews has key cities on its expansion radar, including Dallas, London, Maui, New York, Oahu, Paris, Phoenix/Scottsdale, San Francisco, Seattle and Toronto, as well as markets such as Minneapolis, Pittsburgh, Tampa, Baltimore, Anaheim, Denver, Detroit, Cleveland, Charleston, Charlotte, Portland, Sacramento, Cincinnati, Salt Lake City, San Diego, St. Louis, Houston and Vancouver.
Furbay noted, “We expect to have more acquisitions this year.”