Too much may not even be enough
I noted in a prior post that upgrading infrastructure and catching up on deferred maintenance — while sometimes necessary priorities — are unlikely generators of RevPAR. Playing it safe in an unsafe economy has its merits, but playing to win calls for more extreme measures.
One prospective example is a large hotel in New York City with acknowledged infrastructure issues that traded hands recently in a competitive acquisition marketplace. The successful buyer discounted the “necessary” systems upgrades and bet on a cosmetic upgrade instead, enabling the buyer to outbid those who factored large reconstruction numbers into their pro forma. We will see how this fares, but rising values and RevPAR have made this look like a prescient purchase.
Another example is Miami Beach’s legendary Fontainebleau, an example of riches to rags to riches draped over the peaks and valleys of prior economic reversals and seismic shifts in social priorities.
Completed in 1954 to designs by Morris Lapidus, this iconic property debuted as an early — and formative — explication of nouveau riche heaven for the post-war middle class, reviled by critics as a “kitsch monstrosity” but graced by Frank Sinatra, Judy Garland and the showbiz world. The setting and circumstances were a microcosm of American hegemony transformed by the American dream. This heady can-do era, though marked by Orgman conformity, was propelled by self-centered dreams of making it, 50s style, the Cape Cod fronting the neat lawn while basking in an ethereal black-and-white television glow.
Doughboys, who had scarcely visited the next town before their tours of duty, returned from Pacific jungles with notions of healthier travel experiences in safer warm climates. Fueled by the turn of industry from automatic weapons to automobiles and aided by roads newly laid for phantom tanks envisioned to repel a phantom red menace, the two-week-a-year dream and dreamer arrived in renascent Miami Beach, former decayed Deco haven, replete with middle class opulence invoked by a vocabulary that resonated with its practitioners — a middle class quasi-modernism that eschewed the European aristocratic models that had collapsed in the face of the Nazi juggernaut. The Fontainebleau — as conceived by an architect whose autobiography was entitled “Too Much is Never Enough” — became the emblem of this new entitlement, the apotheosis of the middle class dream and the playground of the nouveau riche.
Downturns of the 70s, 80s and 90s (lest we forget the near certainty of bad times at least once a decade) successively turned the luster of 50s glitter to a glassy frozen moment in time, slowly melting like a frozen daiquiri in the Florida sun. Adding to the economic implosions that beached the white knight Fontainebleau — now morphed into a white whale — social transformation sent increasing amounts of disposable income off on European jaunts, now of discovery rather than destruction. The passage of time transformed former two-week visitors into old-age final residency, casting Florida, and the Fontainebleau as its emblem, as symbols of middle-class ennui — the dream turned to dreary reality a few million times over.
So the 2008 downturn was ample ammunition to bury the king of Miami, much like the 1789 revolution consigned the king of France to forfeit his Fontainebleau, namesake royalty ending up as politically underwater as the financially underwater titans of today. But a shrewd transformation has triumphed over the seemingly all-powerful forces of historical decay. An apartment tower, a transformed pool area and — most spectacularly — a rejuvenated lobby, with associated bars and restaurants lit by an otherworldly blue glow, illuminating late nights, hip dining and hipper-than-thou drinking — seemingly all by high-heeled and hip-less models — have made the Fontainebleau not a remodeled old hotel, but essentially a new property that keeps the fame of a bygone era but not the framework.
Capitalizing on the legendary American capacity for reinvention, and ameliorated by the well-known American capacity to forget, the Fontainebleau has been able to position itself as the Fontainebleau of today, not the one of yesteryear. This seems to me to be the critical issue — the ability to redefine the essence of the asset, not merely to remodel it. The former is an effort to ride the economic waves, while the latter is an effort to float on the surface. If we are on a rising tide, the proverbial one that lifts all ships, remodeling and floating will produce economic buoyancy as desired. But in rougher waters, savvy surfers will not only catch the big waves — they will ride out the bad ones.
Perhaps this is also a reflection on looking backward versus looking forward. One would think that the severest economic jolt in 79 years would have forestalled dreams of increasing desires, and restoring things to the way they were would be good enough. But the increasing pace of images, technology and technology-enhanced images has fueled the dreams of the new middle, which is now not so much a class (unless one refers to their youth) as a market segment. In this competitive and rapidly changing marketplace, to be in the curl of the wave means having your back to the big wall of water, face forward and riding the big one.