May 30, 2008 - Downtown Dallas lodging options got an injection of style Friday, with the opening of the flashy Adam D. Tihany-designed Joule hotel.

Despite a tight economy, operators of the 129-room hotel hope guests will be eager to pay for it.

Rooms at the Joule, which is part of Starwood Hotels & Resorts Worldwide LLC's Luxury Collection, start at $380 a night, with the 20th-floor penthouse rising to $5,000.

Officials with hotel developer Juno Development said the Joule is positioned to attract well-heeled customers who put a premium on luxury service and fashion-forward design.

"Every single thing that was done in here was custom-designed by Adam Tihany for this project only," said Caroline Lerner Perel, who runs Juno with her husband, David Perel, referring to the upscale New York restaurant and hotel designer. "This will never be replicated anywhere ... We're providing something that doesn't exist in the market at this point."

The Joule will also have the powerful sales and marketing backing of Starwood, which has significantly expanded its footprint in the downtown Dallas market since 2003 with the Westin City Center, the Sheraton and the W Dallas Victory.

Unlike other recent additions, the Joule will be in the heart of downtown, near the flagship Neiman Marcus department store. (The hotel's room phones include a button to connect guests directly with a personal shopper at the ritzy retailer.)

But as the lagging economy pushes many companies to scale back business trips, some market watchers wonder who will fill all those high-end rooms added to the central Dallas market in the last few years.

Since 2006, the city has welcomed several other properties vying for guests willing to pay more than $300 a night, including the W Dallas Victory, the Hotel Palomar, the Ritz-Carlton Dallas and the Stoneleigh hotel.

Local hotel operators say the market seems to be handling the extra rooms, but they say they worry that Dallas could be nearing a saturation point.

Plans for a 139-room Mandarin Oriental, which was slated to open next year, have been postponed until at least 2010.

Nationally, luxury hotels are outpacing the industry in occupancy rates. But Dallas hotels have been slow to recover from the economic downturn in 2001. Occupancy rates are in the mid- to high 60s here -- largely due to a dearth of leisure travelers that leaves many rooms empty on weekends.

John Keeling, a senior vice president with PKF Consulting in Houston, said growth demand for hotels downtown has been anemic, "and we don't see that changing in the near future."

And while the Joule will be closer than its luxury competitors to downtown offices, it isn't in the heart of popular entertainment districts in Victory Park or Uptown.

"They're [the Joule] going to have to be a destination," Mr. Keeling said.

Still, operators of other luxury properties in Dallas say the market has been surprisingly resilient, especially at the top end.

The Ritz-Carlton Dallas, which opened last August, has exceeded its sales goals each month, with demand for its highest-end offerings, such as the Ritz-Carlton "Club" rooms, spa treatments and party bookings, being particularly strong.

Robert Boulogne, chief operating officer for Rosewood Hotels & Resorts, said the market seems to be absorbing the newcomers and, although occupancy has dipped for the company's Rosewood Mansion on Turtle Creek and Rosewood Crescent hotels, its average daily room rate has gone up. "We're holding our own," he said.

Even so, Rosewood isn't standing still in the face of new competitors. The luxury operator recently renovated the Crescent and is about to begin a $20 million renovation of the public spaces and guest rooms at the Mansion.

The Joule had its share of hiccups. The hotel was ready to occupy last year, but the opening was put on hold as the developers switched from San Francisco-based boutique operator Kimpton Hotels & Restaurants LLC to Starwood to manage the property.

The hotel's bar was supposed to be run by Pure Management Group, a Las Vegas nightclub operator popular with celebrities. But after Pure Management was raided by the Internal Revenue Service for tax evasion in February, hotel officials decided to seek another partner. Ms. Perel said they're finalizing a new deal and the bar could open as early as late August.

The Joule is in the former Dallas National Bank, a 20-story building with gothic arches that was completed in 1929, plus a new adjacent 10-story building.

The hotel's name refers to a unit of energy -- a nod to one of Texas' biggest industries. The lobby features a giant gear, and Charlie Palmer's restaurant has wind turbines in the ceiling.

Project architects used the building's original architectural plans to restore a historic balconette on the building's facade, as well as massive brass doors that had long ago been removed. To add a separate entrance for a cellar bar without compromising the historic exterior, the architect added a 13-foot-tall pivoting wall that will be open during operating hours.

Another modern twist: a cantilevered pool atop the 10th floor of the new building that juts eight feet over the sidewalk. Passers-by below can see swimmers, plus a nighttime light show from the 132 fiber optic lights in the pool.

Hotel owner Tim Headington, who owns Headington Oil Co. LLC, declined to say how much the project cost.

"It was definitely an act of love, which sometimes requires financing," he said.

The Dallas billionaire said time will tell if there is enough business to support the high-end hotel along with all the other rooms that have entered the market in the last couple of years.

"I don't know if it's the right project in Dallas at the right time," Mr. Headington said. "What we've is done is so off the normal track that I think we'll find a market for this hotel."

THE JOULE

Location: 1530 Main St.

Opened: Friday

Owner: Tim Headington, who also owns Headington Oil Co. LLC

Operator: Starwood Hotels & Resorts Worldwide LLC

Interior designer: Adam D. Tihany

Rooms: 129

Rates: $380 to $5,000 for a penthouse suite

Features: Charlie Palmer restaurant, a 10th-floor pool jutting eight feet over the sidewalk, Tihany-designed furnishings

SOURCE: Dallas Morning News research

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