The Tisch family, co-owners of the National Football League’s New York Giants, have reason to celebrate even though their team won’t make the playoffs. The yearlong renovations at their luxury Loews Regency Hotel New York are being completed in time for the Super Bowl.
All 380 rooms at the Park Avenue property, which is set to open next month after a $100 million revamp, are booked for the weekend of Jan. 31 through Feb. 2, the day the championship game will be played across the Hudson River in New Jersey.
“We’ve been getting a lot of interest in the hotel,” said Jonathan Tisch, co-chairman of New York-based Loews (L) Corp., which owns and manages the Regency through its lodging unit. “We anticipate we’ll get good returns on our investment.”
Loews, an insurance and energy holding company founded by the Tisch family, is wrapping up the project at a cost that ballooned from an initial estimate of $35 million six years ago. The overhaul, which included gutting the 50-year-old Regency’s rooms, corridors and lobby, is part of the company’s plan to build up its hotel division. It also will enable Loews to charge higher rates at the property, the landlord’s only hotel in New York City, when it reopens on Jan. 16, Tisch said.
“The investment is based on the importance of the property to the entire Loews chain,” he said in a telephone interview. “It is our flagship hotel, and as such represents the entire company.”
All the furniture, carpets and decorations were removed, and much of it was donated to victims of Hurricane Sandy, which hit the region in October 2012, Tisch said. Loews replaced the hotel’s windows and rebuilt the lobby, which now features a lounge area with beverage service. Some suites were divided to raise the room count to 380 from 354.
“We kept nothing at all,” Tisch said. “I’ve grown up in this hotel. It needed an update.”
The makeover will increase demand for the Regency and allow Loews to charge more for its rooms, including around the time of the Super Bowl as football fans cram into the area, according to Tisch. The game will be played at MetLife Stadium in East Rutherford, New Jersey, the Giants’ home field. The team was eliminated from playoff contention last week.
Tisch, co-chairman of the 2014 Super Bowl Host Committee, declined to say how much guests are paying to stay at the Regency on the sold-out days, and prices are unavailable on the hotel’s website. Rooms on the Thursday before the Super Bowl start at $989. Rates on opening night, Jan. 16, range from $519 to $2,649 for a suite, according to the website.
Across Manhattan, a hotel room costs an average of $418.93 for Thursday, Jan. 30, through Monday, Feb. 3, up 64 percent from the corresponding weekend this year, data provided by Orbitz Worldwide Inc. (OWW) show. Hotels near La Guardia Airport in Queens have New York City’s biggest jump, more than doubling to $307.58 on average, according to the Chicago-based travel-services company.
In New Jersey, rooms in Newark, 10 miles (16 kilometers) from the Super Bowl site, average $335.74, more than triple the year-earlier rate. The price almost tripled at properties near Newark Liberty International Airport, Orbitz data show.
The Regency project is part of an initiative to bolster Loews’s hotel business, the company’s smallest unit. The division, which has 20 properties, contributed $2 million to Loews’s $793 million of net income in the nine months through September, according to a regulatory filing.
That’s down from $57 million in the first nine months of 2008 as a “sharp drop” in travel spending during the financial crisis cut into demand at the hotels, according to Joshua Shanker, a research analyst at Deutsche Bank AG with a buy rating on Loews Corp.
The company has allocated about $1 billion for hotel acquisitions, new developments and renovations since mid-2012, when it bought the Loews Hollywood Hotel in Los Angeles. Loews’s lodging division is seeking expansion opportunities and expects to complete two hotel purchases before year’s end, Tisch said, declining to give specifics because the talks are private. Recent acquisitions include the Back Bay Hotel in Boston and the Madison Hotel in Washington.
Loews has been slow to add hotels in major cities to attract well-paying business travelers and take advantage of economies of scale, according to Shanker.
“They’ve been under-earning because Loews had been focused on high-end destination-type hotels,” Shanker said in a telephone interview from New York. “They haven’t been successful in tapping into the business-traveler demographic because they don’t have hotels in all the cities where business people like to go.”
The hotel recovery has been faster in the midscale and extended-stay categories, creating headwinds for a high-end-focused company like Loews, according to Patrick Scholes, a lodging analyst at SunTrust Robinson Humphrey Inc. in New York.
“It will be challenging for them to grow as nearly all the growth of new hotels is in select service -- think Hilton Garden Inn and Fairfield by Marriott and Holiday Inn Express -- and they don’t have a competitive product in that realm,” Scholes said in an interview.
Hilton Worldwide Holdings Inc., which raised $2.35 billion last week in a record initial public offering for the industry, is focusing less on luxury and more on expanding such brands as DoubleTree and Homewood Suites, Chief Executive Officer Christopher Nassetta said in a Bloomberg Television interview.
The lack of earnings at Loews’s hotels unit may have held back the company’s stock performance, Shanker said in a September research note. Loews Corp. shares have gained 14 percent this year, compared with 24 percent advance in the Standard and Poor’s 500 Index.
Shanker estimated the value of the hotel unit’s real estate to be about $1.17 billion, according to the note.
Under construction are the 1,800-room Cabana Bay Beach Resort at Universal Orlando in Florida, a partnership with Universal Parks & Resorts; and the 400-room Loews Chicago Hotel, which is being developed by DRW Trading Group. Loews also may consider portfolio acquisitions, Tisch said.
“We very much look at existing chains for acquisition and merger opportunities,” he said. “Clearly we’ll invest in hotels where Loews can bring in its own management. We look at a lot of different things.”
Tisch wants to add properties in New York, where a projected 12,000 rooms will open in 2014, bringing the city’s total to about 120,000, according to Hendersonville, Tennessee-based lodging research firm STR.
There’s room for more hotels in Manhattan because of an increase in travelers that’s helped keep occupancies in the mid-80 percent range, Tisch said.
Occupancy in New York was 84.3 percent this year through September, compared with 63.9 percent for all of North America, STR data show.
New York will draw a record 54.3 million tourists this year, outgoing Mayor Michael Bloomberg said on Dec. 10. The city is on track to reach 55 million annual visitors by the end of 2014, said the mayor, who is the founder and majority owner of Bloomberg News parent Bloomberg LP.
There’s “tremendous interest in people coming to New York City,” Tisch said. “At the Loews, we already had a lovely base of clientele and the majority of people are very anxious to come back and reacquaint themselves with the new Loews Regency. We’re very optimistic.”
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