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Jonathan Tisch Hoping a $50 million Renovation Will Liven Up the 11-year-old
 Loews Miami Beach; Using Cash Reserves to Fund the Work

By Douglas Hanks, The Miami HeraldMcClatchy-Tribune Regional News

October 9, 2009 --Jonathan Tisch walked into the hotel room at the Loews Miami Beach, looked down, and saw too much taupe.

Tisch, CEO of Loews Hotels, had approved the carpet months earlier at a design meeting for a major renovation of the oceanfront resort. But after seeing the fabric in a model room, Tisch ordered more blues and greens.

"He felt it was a little drab," recalled top designer Greg Walton, of RTKL Associates in Coral Gables. "He really wanted that Miami feel in the room."

Tisch, 55, hasn't delegated many decisions when it comes to the first major remake of the most profitable hotel in the Loews chain.

"I've been in every design meeting," Tisch said hours after flying into Miami on the Loews corporate jet for an inspection tour that would have him back in New York by evening. "I just felt it might need that extra bit of input I could offer." He's hoping a $50 million renovation will both liven up the 11-year-old resort's look and send a message amid the toughest competition the Loews Miami Beach has ever faced.

"We're doing it because we want to remain the dominant hotel in South Beach," he said.

Dominance has gotten much harder for the Loews, 1601 Collins Ave., which until recently could boast of being the most updated convention hotel in Miami Beach.

That changed last fall when the Fontainebleau reopened after a $500 million renovation, along with a $210 million redo the Eden Roc next door that added 282 rooms.

SHOWERS, NOT TUBS

This summer, workers began stripping Loews rooms of their popcorn ceilings and blue-vinyl furniture. Out went 80 percent of the tubs in favor of roomier showers.

In the lobby, an ornate staircase decorated with pineapples (also a Tisch directive) has been demolished to make way for a new retail area with a wall-sized aquarium.

The old gift shop is being converted into a luggage holding area, freeing bellhops from the current practice of storing bags in a roped-off area of the lobby floor.

An old-fashioned ice cream parlor will face the lobby sushi bar once the work is finished, which the hotel says should happen before December. Water will cascade from upgraded walls in the hotel's driveway, the renovation's last step.

But while the furnishings and fabric may be strictly to Tisch's liking, the financials are not.

Hotels usually enjoy significant rate boosts when introducing a renovated project, but the Loews expects to rent its refurbished rooms for less than it did during the winter of 2008.

A brutal recession has handed Tisch the worst travel market he can recall in his nearly 30 years in the business.

CHICAGO DEAL

Recently Loews pulled out of a subsidized deal to build a hotel on free land in Chicago, citing a weak travel market and a lack of construction loans. The chain's revenues plunged 28 percent in the first six months of 2009, swinging to a $15 million loss from a $30 million profit, according to filings by parent Loews Corp.

Jonathan's father, Preston Robert, and uncle Laurence grew the Loews Corp. out of a chain of movie theaters they acquired in the 1960s. Some of the cash came from the Americana Hotel, which they opened in 1956 in Bal Harbour. Father and son share a similar hands-on management style: "Bob" Tisch was known to personally hire bellhops, calling them his best salesmen.

The Tisch family built the Loews with a $60 million subsidy from Miami Beach, which the city offered as incentive for building a hotel to serve the nearby convention center.

The two elders were reluctant to reenter the Miami Beach market after selling the Americana in 1972, skeptical South Beach could be a convention destination. Miami Beach hadn't seen a new hotel since 1967, but Jonathan pushed hard for the deal.

BOUGHT SITE

In 2004, Loews, which contributed about $80 million to build the hotel, exercised its option to buy the city-owned site for $28 million. In 2005, an appraiser valued the land and hotel at $255 million.

"This is one of the all-stars on the beach," said Gregory Rumpel, a broker and consultant for Jones Lang LaSalle Hotels in Coral Gables. "Even if [revenues] went down 20 or 30 percent, it still would be profitable."

Last year, the oceanfront resort made about $20 million after paying all expenses, including debt, on revenue of about $112 million, according to regulatory filings.

Still, the economy has hammered the Loews, too. Managing Director Shawn Hauver said the hotel made payroll cuts this year, but he declined to offer details.

No figures were available for 2009, but Tisch and Hauver describe a punishing year. As a convention hotel in a resort destination, the Loews got hit particularly hard by corporations slashing meeting budgets.

To keep vacationers booking, the Loews was forced to cut room rates amid a wave of new hotel openings that left Miami-Dade with 10 percent more available rooms than a year ago.

Even with the larger inventory, all hotels in Miami-Dade generated 15 percent less revenue than they did a year ago, according to data from Smith Travel Research.

CASH RESERVES

With hotel loans costly in a time of parched credit, Tisch is using cash reserves from Loews Hotels to fund the renovation. Budget concerns almost forced Tisch to scrap the aquarium in the retail area, but declining construction costs rescued the feature.

On a recent walk-through of some finished rooms, Tisch pointed out a floral-print fabric he suggested for the oversized headboards and the night lights he insisted on under the new bathrooms' vanities. "I've stubbed my toe one too many times," he said.

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To see more of The Miami Herald or to subscribe to the newspaper, go to http://www.herald.com.

Copyright (c) 2009, The Miami Herald

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