Hope is a fleeting thing when you’ve lost your loved ones, your home, your city. Hope remains fleeting a year later when your life is nothing like before— before the winds and floodwaters came and tore asunder one of America’s beloved cities. Hope, it would seem, is still in short supply in New Orleans, even today, a little more than a year since the devastating effects of Hurricane Katrina. But the wonderful thing about hope is that it can exist in many forms and can be rekindled quite unexpectedly. For New Orleans residents, maybe it’s clean running water, maybe it’s a new roof, maybe it’s the reopening of a school. Or maybe, for a city where tourism is its largest industry and the source of 40% of its tax dollars, it’s a hotel. For this week at least, hope in New Orleans takes the form of the 450-room hotel tower that will make its grand opening as part of Harrah’s New Orleans casino. Representing the only hotel space that’s directly associated with Harrah’s, the tower was originally supposed to make its premier this past March. However, as a result of Hurricane Katrina, the project’s completion and opening was pushed back to September. Some hotel investors might question whether the project should have been completed at all considering all that has happened to New Orleans. But its feasibility nor its future was never in doubt, according to Jim Hoskins, the senior vp of the casino and, now, the hotel as well. “We absolutely are extremely bullish on the future of New Orleans and the entire Gulf Coast region,” Hoskins asserted. “There was never a question if our company would move forward with this new facility and invest in the community. I feel very strongly that this will be part of a success story in the future.” Hoskins added that none of the tower project’s plans changed following Hurricane Katrina, only its timeline. He also pointed out that the hotel was already being designed with the latest in “weather preparedness technology” and is built to withstand hurricanes. To avoid any future flooding problems, he said that all of the structures’ mechanical and electric equipment is located high and safely above ground. And so now hope grows in New Orleans as the signs of significant progress become tangible. But is the progress sustainable as investors continue to evaluate the long-term prospects of New Orleans as a tourist and convention destination? The answer is emphatically “yes” if you believe in one hotel investor who goes by the name of Donald Trump. Trump, along with several development partners that make up a development entity known as Poydras LLC, is set to build an approximately $200-million, 68-story condominium hotel tower that will be known as Trump International Hotel & Tower. When complete, it will be the tallest building in New Orleans. It’s groundbreaking is now scheduled for spring of 2007, with the completion estimated to be in 2009. Any questions about the feasibility of this project or the wherewithal of its development partners were answered when it was revealed to the world the week before Hurricane Katrina struck and kept moving forward ever since. “We started working with the Trump Organization six months prior to Katrina and we had the papers in hand three or four days before Katrina hit,” explained Cliff Mowe, one of Poydras’ optimistic development partners. “The irony is that its site, which is just a parking lot now, did not get flooded at all. It’s high and dry. So there have been no changes to its plans. I mean, we’ve been modifying them along the way. But all we really did after the storm was slow things down because this is not a time to be out there selling units. We wanted to get things regrouped in New Orleans.” Mowe added that the Trump Organization, which never wavered in its strong commitment to the project, will manage the entire building, including the hotel operations. The condo hotel units will be built above the 10th floor and will number more than 500. Most of the units will average anywhere between 600 and 750 sf. There will also be a small number of one- and two-bedroom units. Above the condo hotel portion, on the top 14 floors of the structure, will be penthouses restricted four to a floor. On the lower levels, boutique retail stores will be found along with a five-star restaurant and 10 levels of parking. Projects like the Trump International Hotel are exactly the kind of evolutionary beacons that New Orleans requires in order to become what Laurence Geller, president and CEO of Strategic Hotels & Resorts, said could be the “first great 21st Century American city.” But such a statement is not just lip service from Geller because Strategic Hotels & Resorts, which saw its 1,184-room Hyatt Regency New Orleans hotel ripped apart by Hurricane Katrina, is putting its investment money where Geller’s mouth is through the $716-million Hyatt Jazz District project. Geller revealed plans for the project earlier this year in HOTEL BUSINESS®. At the center of the project is a reborn Hyatt Regency as well as the creation of a 20-acre performance arts park that is anchored by a new National Jazz Center. The Superdome, an outdoor auditorium, new city government buildings and new civil courts buildings are also prominent parts of the project, which could begin next year and be complete in 2009— about the same time that the Trump International Hotel premiers. And the support of the project is significant, as it includes Louisiana’s governor Kathleen Blanco, New Orleans’ mayor C. Ray Nagin, Global Hyatt Corp. and a myriad of other major players in addition to Strategic Hotels. “After Katrina occurred, I was really depressed and so I wrote a paper to myself internally and realized that New Orleans could be the first great 21st Century American city, but the Superdome area would have to be revitalized in order to do so,” Geller told HOTEL BUSINESS®. “This project then serendipitously came together over nine months. But it’s not my project. We are accepting of others getting involved in it, but there will be nothing to sidetrack it because we’re so far on our way. Hopefully, others will join in. There was no park of this nature in New Orleans before this and there is nothing like this project going on in New Orleans. This is serious stuff.” The success of such projects, and especially the Hyatt Jazz District, which numerous hotel owners and operators openly point to as the biggest reason for hope, becomes even more serious when examining further how much tourism fuels New Orleans. According to the Louisiana Office of Tourism, in 2004, 10.1 million people visited New Orleans. In 2005, the city was on pace to surpass that level of visitation before Hurricane Katrina struck on Aug. 29. Those past annual visitors managed to create a $5.5-billion tourism industry in New Orleans. But without them, an average of $15.2 million can be lost each day in direct tourism income. Such loss is indeed occurring in New Orleans a year after Hurricane Katrina since daily flights serviced by the city’s Louis Armstrong International Airport are down to 107, according to the New Orleans Tourism Marketing Corp. Before Hurricane Katrina, there were 166 daily flights serviced. As a result, most of New Orleans’ operating metropolitan area hotels, which number 178 now (there were 265 prior to Hurricane Katrina) are hurting financially. “Business levels have dropped off quite a bit,” asserted Daneen Zeringue, the general manager of the Chateau Sonesta Hotel New Orleans, one of two Sonesta Hotels & Resorts properties in New Orleans. “The city is open and ready for business and both our hotels are ready to provide the typical New Orleans experience, but business levels have dropped off substantially.” Most other New Orleans hoteliers echoed Zeringue’s words, noting that the same areas that tourists would have frequented prior to Hurricane Katrina’s destruction— the French Quarter, the riverfront area and most of downtown, were not affected much by the hurricane and are back to normal, with 1,239 restaurants out of 1,882 open again. The fundamental problem, according to hoteliers, in getting tourists and business travelers back to New Orleans is simply bad publicity. “We’re living a cable network news nightmare with a lot of misinformation out there,” said Al Groos, gm of the Royal Sonesta Hotel New Orleans. “We hear it all the time when people call for reservations. Is it still flooded? Are you open? We hear all sorts of things. People think the French Quarter was affected like the Ninth Ward. But then we hear all the time when they come down and see the city, ‘Boy, it looks normal here.’ So the media aren’t doing us any justice. But as we navigate further through hurricane season people are coming in. As the fall season kicks in we’ll see a lot more interest.” Ken Smith, a Dallas-based senior vp of operations at Hilton Hotels Corp., noted that earlier this year a convention of operating room nurses was going to cancel its reservations at one of Hilton’s New Orleans properties. However, the meeting’s planners were invited to New Orleans ahead of time to survey the situation first hand before canceling. After departing New Orleans, the convention kept its reservations. Tom Murray, COO of the Americas for InterContinental Hotels Corp., further pointed out that IHG has brought hundreds of travel agents through New Orleans within the past year and that they are excited by what they see. However, he said that the gms of the 10 open IHG-affiliated hotels in New Orleans (there were 11 pre-Katrina) continue to assert that further positive communication about the normal operating status of New Orleans’ hotels and tourist areas is needed. “We’re looking to get our hotels totally stabilized right now, and while 2006 has been a challenge, we think 2007 will be better and we’re projecting that business will be back to normal in 2008 from an occupancy standpoint,” Smith added. “So we’re very bullish on New Orleans right now. It’s just a question of getting the ball rolling and seeing major improvements month to month.” Meanwhile, according to Ed Netzhammer, a regional vp for Omni Hotels, earlier this year, Omni Hotels was concerned about whether New Orleans would make a full recovery, especially considering the company has two properties in the Crescent City. However, he said that within the past four or five months, the city started to show progress and that it will be back to pre-Katrina business levels by 2008 or 2009. But there’s a caveat to such improvement, he said. “The biggest long-term threat to New Orleans, aside from hurricanes and the levees, is getting all of the residents back to New Orleans, which equates to labor.” And Netzhammer is not alone in citing that problem. “I don’t think the levees are the worry,” Murray remarked. “Getting the marketplace ready for employees to come back is the challenge.” Furthering the point, Smith explained, “With the labor situation, in some respects you have to bend some of your service rules that you would normally have. Everyone’s paying a premium for labor at this time in order to attract people. If a hotel has some significant hurdles, we can always supplement it with other hotels.” The labor problem is more readily seen in New Orleans’ population figures. According to the Times Picayune, Orleans Parish went from 485,000 pre-Katrina residents down to less than 235,000 post-Katrina. The entire metropolitan New Orleans area declined from 1.3 million pre-Katrina down to 1.1 million post-Katrina. Hoteliers added that the lack of affordable housing is keeping the population from coming back to live and work in the city. One published report stated that the prices of homes in the area have jumped 25% and rents have risen 40% post-Katrina. So now the hotels must patiently wait for both their guests and employees to come back to New Orleans. The ironic thing is when they do return, they will discover that the hotel product is top-of-the-line as a direct result of the fast-forwarded renovation projects that took place following last year’s disaster and during the city’s tourism lull. “If I was the president of the New Orleans Convention & Visitors Bureau, I would herald to the meeting planners what great consistent product at different tiers New Orleans now has,” said Roger Hill, the CEO of Gettys Group, which is working on the renovation of one of the most prominent hotels in New Orleans. Industry sources say it is the Fairmont New Orleans. “New Orleans is a very old city and founded in 1718, so the infrastructure was old, but the silver lining in all this is that in the end, the city’s infrastructure will be new,” added Steve Ferran, gm of the Loews New Orleans Hotel. Helping to make the hotel product brand new are companies like Hilton, InterContinental Hotels Group, Sonesta, and Omni Hotels, which are all clearly committed to New Orleans’ future. Hilton, for one, recently oversaw a $40-million renovation project at the Hilton New Orleans Riverside. Meanwhile, Omni is set to reopen its Omni Royal Crescent Hotel after significant refurbishments, IHG will see a Holiday Inn Express open later this year. Sonesta’s CEO and vice chairman, Peter Sonnabend, said, “We’re looking for opportunities to expand Sonesta’s presence in New Orleans. In connection with the Hyatt Jazz District project, we’re talking to a developer about creating a condo hotel down here and also looking for opportunities in the French Quarter. We love New Orleans. Our headquarters is in Boston, but our heart is in New Orleans.” Come Dec. 4th, another cause for hope will materialize when the city welcomes back what is literally known as its Crown Jewel— the 527-room Ritz-Carlton New Orleans, which has been closed since the hurricane. Like most New Orleans properties, the hotel carried out renovations during its downtime that were not planned for three or four years. As a result, Ritz-Carlton Hotel Co., LLC, which operates the property, expects the hotel to soon reclaim its title as best in the city and help bring the city back to life. “Tourism is the second biggest economic generator here,” asserted Myra deGersdorff, gm of the hotel. “And hotels are doing a great deal of work now. There are so many that could have said we’ll wait because of business levels, but they didn’t. They opened and they’re hanging in there.” Thankfully, hope, as it were, never seems to expire.
