Loews Hotels & Resorts' Paul Whetsell

By Danny King
Paul WhetsellVeteran hotelier Paul Whetsell was named CEO of Loews Hotels & Resorts last year and was charged with expanding the chain via acquisitions and new developments. Since last summer, Loews has either acquired or reached agreements for hotels in Los Angeles, Washington, Chicago, Boston and Orlando. Whetsell spoke with hotels editor Danny King about the growth spurt.

Q: Loews' first acquisition after your hiring was the Renaissance Hollywood, now the Loews Hollywood Hotel. That whole development, including Hollywood & Highland and what's now the Dolby Theatre, has had mixed results. How has that property performed?

A:
A 635-room hotel with 60,000 square feet of meeting space is not that prevalent in the Los Angeles market. Finding properties like that is difficult, and we felt comfortable because it had a big group component.

There's also a significant leisure component, not the least of which is Hollywood-related tourism. And Universal Studios is right around the corner. The business [demand] aspect is a little harder to articulate, but the film industry is so big in that area. Since we took over, the hotel has performed almost exactly how we predicted. Occupancy is better [than expected], while rate has struggled, but we haven't even started its [estimated $27 million] renovation.

Q: When will that start?

A:
We would've liked to start at the beginning of the year, but with the Academy Awards coming in February, we didn't want the construction. So we'll start March 1.

Q: In December, Loews agreed to buy the Madison Hotel in Washington. But Washington was the poorest-performing major U.S. market in terms of revenue growth last year, and analysts say there may be government per-diem reductions. So why the confidence?

A:
Every market segment exists there: business, group, associations, leisure, even embassy and diplomatic businesses. We don't take a lot of per-diem business at our hotels; that impacts lower-level properties more than the upscale ones. Washington, D.C., is one of the most stable hotel markets in the country. It never experienced the significant drop that the other markets did.

Q: Loews also recently agreed to buy Boston's Back Bay hotel. Why?

A:
The Back Bay area is the entertainment and retail hub of Boston, which is an attractive meetings market. We're going to make a few changes in the public area, and we're putting in a restaurant and making a soft-goods renovation. This property will thrive as a Loews.

Q: Analysts appear to be especially bullish about the U.S. hotel market for the next few years. Why shouldn't people be skeptical?

A:
There's minimal new construction, and whether you think the economy is heating up or limping along, there's a certain amount of certainty. What impacts the market [negatively] is the uncertainty stemming from events like 9/11 and the Lehman Bros. meltdown, but absent that, we see a certain amount of confidence. I think the next three to four years are going to be pretty good.

Q: There are a lot of hotel companies looking to expand within Loews' sector of North American luxury hotels. Any concern over the additional competition?

A:
Loews is in the major markets that typically benefit from these types of periods the most. Loews doesn't have the type of operations model that gives us the confidence to go into the secondary markets, where you can really feel the pressure. But when you look at markets like Boston, Washington, New York and Los Angeles, I don't think there's overcrowding from our end.

Follow Danny King on Twitter @dktravelweekly.
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