|By Nancy Sarnoff, Houston
ChronicleMcClatchy-Tribune Business News
Oct. 18, 2006 - Downtown's trendy Hotel Icon, which opened to great fanfare just before Houston hosted Super Bowl XXXVIII, has a new owner.
The 135-room boutique hotel sold Tuesday for an undisclosed price to an investment fund controlled by Lowe Enterprises Investors, a Los Angeles-based real estate development company that hopes to reap the benefits of an improving downtown hotel market.
The company, which is affiliated with 30 hotels across the country, including Austin's famed Driskill Hotel, purchased the Houston property from a local group led by condominium developer Randall Davis. The group decided to sell because the hotel's performance didn't live up to the group's expectations, Davis said.
"We launched with the Super Bowl, which was a great kickoff, but the first year was very, very difficult," he said, while expressing mixed feelings about selling the property that received high marks from travel and other publications.
The new owner sees a strong future for the hotel, which opened in January 2004.
The city's steadily improving economy is adding workers and visitors downtown, which should help boost occupancy at Hotel Icon, said Bleecker Seaman, managing director of Lowe Enterprises Investors.
Located along the Main Street rail line and near the performing arts district and convention center, the hotel is a prime property that "would be difficult to replicate," he said.
Food and beverage changes?
Guests and visitors shouldn't notice major differences as the new owners take over. The hotel's name and look will remain the same.
But there could be changes at the restaurant and bar.
While no decisions have been made yet, Seaman said he anticipates "re-concepting" the food and beverage operations. That could include new agreements with the groups that have operated the high-profile restaurant and bar, which have become destinations in themselves.
Bank, the hotel's upscale eatery, has been run by prominent chef and restaurateur Jean-Georges Vongerichten. The bar, the Whiskey, was operated by bar and lounge magnate Rande Gerber, the husband of supermodel Cindy Crawford.
Lowe Enterprises Investors said it is working with both groups on new agreements to continue operating, Seaman said.
"Our goal will be to continue to polish this gem in the local marketplace and continue to differentiate it as the best independent property in Houston," he said.
The new owner said it will focus on increasing business at Hotel Icon through its network of hotels throughout the country.
The 12-story structure at 220 Main, formerly the Union National Bank building, was built in 1911. After purchasing the vacant building at a 2002 foreclosure sale, Davis and his partners redeveloped the property into Hotel Icon, an opulent hostelry with original artwork and custom-made furniture. Its guests have included Hollywood celebrities and famous athletes.
Market on upswing
After years of lackluster performance for hotels downtown, Hotel Icon is changing hands as this market is starting to improve.
When the property opened, the local economy was still recovering from the collapse of Enron Corp. During its first year of operation, occupancy at the hotel was in the high 40 percent range, Davis said.
A slow economy, combined with inexperienced owners, affected the property's performance, said John Keeling, senior vice president for PKF Consulting in Houston.
Strengthened in part by a thriving energy industry, the hotel market has started to improve. At the end of this year, downtown occupancy rates are expected to reach close to 70 percent and room rates could be averaging $160 per night, according to Keeling.
"You can make money doing that," he said, adding that the Icon's new owner is an experienced group that's been seeking hotels in new markets.
Along with the Driskill, the Houston property was purchased on behalf of Lowe Hospitality Investment Partners, a $266 million fund that invests in hotel and resort properties.
The Icon's room rates, which now hover in the $180 per night range, will increase as service and demand improves, said Charlie Peck, president and chief operating officer for Destination Hotels & Resorts, a Lowe affiliate that will take over management of the hotel.
"I think the rates will definitely be higher when we feel like we've earned our place in the market," Peck said.
"We will get the property much wider exposure through our international marketing and sales and get the property on the map," he added.
Copyright (c) 2006, Houston Chronicle
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