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Hilton's Conrad Brand to Operate Luxury Hotel in Miami's Espirito Santo Plaza Office Tower
By Douglas Hanks III, The Miami Herald
Knight Ridder/Tribune Business News 

Jul. 8, 2003 - Hilton will open a luxury hotel on Brickell Avenue's new Espirito Santo Plaza office in a bid for big-spending guests amid one of the rockiest times ever for South Florida's resort industry. 

The 203-room hotel will operate under the Conrad brand, the most exclusive and pricey of the Hilton chains. There is only one Conrad in North America -- New York's Waldorf Towers -- but Hilton plans to open four others in the United States after Miami. 

Group Espirito Santo, the Portuguese financial company that owns the tower, will pay Conrad an undisclosed fee to manage the building's 250,000-square-foot hotel. Espirito plans on selling the hotel component to investors, who will keep most of the Conrad profits. 

The 15-year deal, to be announced today, caps an extended search for a hotel there, a search that was complicated when the Sept. 11, 2001, terrorist attacks plunged the travel and resort industries into a tailspin. 

The troubles came amid a glut of new luxury hotels in Miami and Miami Beach -- including a trio of Ritz-Carltons -- that left lenders and investors leery of backing new resort properties here. 

"If you own a hotel on Brickell, or anywhere, you may have to fund deficits for a while to hang in there," said Chase Burritt, a hotel analyst and managing partner of Burritt Associates. 

But Espirito is counting on Brickell's cachet as a Latin American banking center to keep the Conrad rooms booked and on the Conrad brand to sell the 116 condominiums in the 36-story building. Most of those condominiums will be furnished as hotel rooms and rented by Conrad, with the individual owners collecting a portion of the fees. 

Bill Ross, head developer for Espirito in Miami, said condo sales started about two months ago and "couldn't be going better." Buyers had deposits down on about 36 units, he said, before they knew which hotel was moving into the building. 

Conrad is owned by the California-based Hilton Hotels Corp., owner of Doubletree and Embassy Suites, and the United Kingdom's Hilton International, which operates 400 hotels around the world. The two companies cooperate but are owned separately. 

The Conrad's planned December opening will launch a test of the brand's drawing power in the United States. While Conrad took over the Waldorf in 2001, this will be the first time a Conrad started from scratch in the United States. And Hilton has chosen a vacation spot with plenty of high-end hotels. 

"There's no question it's a competitive market," said Marc Grossman, senior vice president of corporate affairs for Hilton Hotels Corp. "But we believe the project will be successful." 

Hilton plans to open Conrads in Indianapolis, Las Vegas, San Diego and Seattle in an effort to carve a niche for the brand in the United States. Conrads operate in luxurious locales around the world, like a manor estate in the Irish countryside and on the banks of the Nile in Cairo, but the Conrad on Brickell will face ritzier hotels nearby: the Mandarin Oriental and the nearly finished Four Seasons. 

Ross, the developer, said Espirito decided that the market had room for a four-star hotel, not another five-star. 

Hilton had a long-standing noncompete agreement with the Fontainebleau Hilton Resort & Towers on Miami Beach that barred the chain from opening properties in the market. While that contract was revised last year, Grossman said, the deal with Espirito was not governed by the agreement. 

Herald staff writer Cara Buckley contributed to this report. 

-----To see more of The Miami Herald -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.herald.com. 

(c) 2003, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. FS, HLT, MAR, HLTGY, HG, 


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