Since relinquishing his CEO role at Loews Hotels & Resorts about two years ago, Jonathan Tisch has never been busier as chairman of the business started by his grandparents in Brooklyn, New York, some 70 years ago.
It was two years ago when Tisch and his cousins charged with running what is now the smallest subsidiary of Loews Corp. decided it was time to up the ante, bring in an experienced and respected CEO in Paul Whetsell and grow the company further in U.S. gateways.
At the moment, the company is in the throws of completing a US$100 million top-to-bottom renovation of its flagship Loews Regency Hotel in New York before the Super Bowl comes to town in February, as well as building hotels in Orlando and Chicago, and renovating several others for a total capital investment of close to US$1 billion.
After Loews gets everything up and running efficiently in 2014, the company will look to further investment and partnership, putting the Loews Corp. balance sheet to work where required with an extended goal of reaching 35 to 40 hotels from its current 21 hotels today.
Tisch was in Chicago last month touring his Chicago project and sat down with HOTELS Magazine to talk about the company, trends like social media marketing (Loews is now spawning reservations from Twitter) and the state of business in his beloved New York City. All talk about his New York Giants football team was off the record.
HOTELS: What’s new, Jon?
Jonathan Tisch: Our new hotel in Hollywood, California (the old Renaissance) is going through a US$30 million renovation, including the rooms and corridors, which are done, and the lobby, which will be done around Christmas. We bought the Madison in Washington, D.C., which we had once before, and we are building a new Argentinian steakhouse starting in early January with Chef Jose Garces. We bought the Back Bay hotel in Boston and started a renovation to the rooms, corridors, lobby, restaurant and bar, which should be done in March.
We have new construction here in Chicago with 400 rooms and about 25,000 sq. ft. of meeting space that will be ready February 15. My father and uncle in the 1960s owned the Ambassador East and West and then for 20 years we had nothing here before running the former House of Blues hotels for a few years. Now we are coming back into the market with a hotel we designed, and it is very exciting.
In Orlando, we are building our fourth hotel. Phase one of the 3-star Cabana Bay Beach Resort will open in April with 600 of the 1,800 rooms. It is the largest hotel under construction in world outside of China and a 50-50 partnership between Loews and NBCUniversal on a US$350 million project. The entire project will be done by June when the second phase of the Harry Potter Experience opens at Universal Studios Florida.
HOTELS: Tell us more about the flagship project in New York City?
Tisch: Being the flagship makes it an extremely important project for the brand. We started thinking about it five years ago and at first we were just going to do rooms and corridors with budget of US$35 million. In talking with my cousins who I run Loews Corp. with we came to realization that we had to do the entire hotel. It meant closing it to get it done efficiently and before the Super Bowl on February 2, 2014. The project grew into rooms, corridors, the lobby, restaurant, bar, we are adding a hair salon and now it is at US$100 million. It will reopen January 16.
HOTELS: You have been busy on multiple fronts. Please elaborate.
Tisch: In addition to the capex, Paul has reworked the entire organization and brought in new heads of sales and marketing, operations, and there are new people at the helm of a number of our properties. A new Loews Hotels is getting ready to feature the acquisitions, new construction and renovated properties.
HOTELS: What precipitated this after years of Loews Hotels being rather quiet?
Tisch: It was time for us to expand and having interviewed five or six CEO candidates in depth, I came to understand how Paul could make a significant change in how we operate the company, how we are viewed in the market and how we can become partners with private equity or REITs to buy hotels together and have Loews operate them.
HOTELS: So, what’s next?
Tisch: There are still markets we want to be in. Of major markets we are not in, San Francisco is by far at top of our list. We would like to be in key cities in Texas, and we are opportunistic. Whereas 2013 was the year of renovation, 2014 will be the year of bringing them back on line and making sure we are operating virtually new hotels based on the capital committed to them.
No deals are imminent, although there are a variety of deals in the pipeline. We needed to breathe a bit this year and since I pick every fabric and make every design decision, it was a crazy year for me. The focus is on getting the Regency done, finishing other renovations and to look at 2014 to start looking for new acquisitions.
HOTELS: What is the end game for Loews Hotels?
Tisch: I would love to be at 35 to 40 hotels, but that’s just a number. We take them one at a time and in the markets we’d like to be in we have to wait for the right opportunities as we don’t like over paying. We hold on to everything at Loews Hotels. We are rarely sellers and Loews Corp. is keeping Loews Hotels. It is not going anywhere.
HOTELS: What is your 2014 forecast?
Tisch: We are looking at a positive year in ‘14. There are always economic issues we worry about, and government issues. The concern is there is a great deal of unsettledness in the Capitol, which makes it tough for CEOs to make long-term investment decisions. That said, we think ‘14 will be a good year. The international traveler has really helped the industry, in general.
HOTELS: Are you worried about New York City getting overbuilt?
Tisch: I am not worried as we seem to be absorbing the rooms. We added 15,000 new rooms in the last few years and supply is up to 90,000, and occupancy is still strong in the mid-80s. What is great from my perspective as the former head of tourism for New York City is to see how the travel and tourism infrastructure now spreads out through all five boroughs.
HOTELS: Are you looking for another hotel in New York City?
Tisch: We have been looking at opportunities on the west side and downtown. We are certainly open to another opportunity in New York.
HOTELS: How are you approaching social media marketing?
Tisch: Social media is so important to any business getting the message out. It levels the playing field between the biggest names in lodging and us at Loews Hotels with 21 properties. We can get our message out in a cost-effective manner using social media, but it just doesn’t work in my life. I email and that is just about it. We will continue to be connected in manners we would have never dreamed of 15 to 20 years ago. At Loews, we have very deliberate initiatives in this area.
HOTELS: Are you creating hotels for the Millennials as so many others have recently stated?
Tisch: We are designing for next generation and that is why we are changing our lobbies to be more communal, have a big wall of tv monitors, tables where every outlet is thought out so people can plug in. Millennials are a very different demographic to Loews, but I point to the Ace Hotel in New York City where every person in the lobby is on a device. That is certainly a metaphor for what people want today in a hotel experience. They don’t want to sit in the room and order room service. That is why we are putting in grab-and-goes where appropriate so people can have a bite, sit and see other people, and get their work done.
HOTELS: The chairman is picking out carpet?
Tisch: Now I view myself as keeper of the brand. I know the culture, the people who have been in the organization as long as I have. That is my role to make sure we have a similar feel and look, and cutting edge on design. This is something I love doing. My wife and I are very involved in design, and it makes a difference. I think our properties stand out because of their design.
Paul has been a great partner in all of this as in the two years he has been working with me, there has not been one crossed wire or mixed message. We have stayed on point.