Jan. 29, 2004 - The landmark Fontainebleau Hilton Resort in Miami Beach is ready to build a second luxury tower in an effort to upgrade its iconic but aging resort. 

Once the winter getaway of such stars as Bob Hope and Elvis Presley, the Fontainebleau has seen its cachet eclipsed by more fashionable South Beach hotels. 

About 60 percent of its business comes from business groups and conventions, meaning it misses out on the higher-paying leisure travelers, a customer base less sensitive to downturns in the economy. 

Fontainebleau and development partner Turnberry Associates recently started construction on a new 462-unit oceanfront tower designed to compete with pricier competitors and now plans on adding another luxury tower with 314 rooms to the 18-acre complex, said Melanie Muss, vice president of development for the Fontainebleau Hilton. 

"These buildings are going to let us cater to the high-end leisure traveler," Muss said. "They are a five-star product." 

The 18-story Fontainebleau III will stand next to the 36-story Fontainebleau II, already under construction by the original comma-shaped hotel that opened in 1954 and quickly came to epitomize Miami Beach's post-war role as a sunny and glamorous retreat. 

Its oceanfront location at 44th Street and Collins Avenue remains a popular destination, but the Fontainebleau qualifies as an upscale hotel, one tier below luxury, said PriceWaterhouseCoopers hotel analyst Scott Berman. Though he called the Fontainebleau one of the great success stories of Miami's hotel industry, Berman said the fancier rooms will be welcome at the resort. 

"This has really infused some fresh momentum," he said. "Their main tower is a 1950s icon." 

The new buildings are being financed as condominium projects, with each room up for sale. Buyers may live in their units when they want and rent them out to hotel guests when they are away. 

Rooms and suites ranging in size from 500 to 1,000 square feet will sell for $350,000 to $1 million. 

Fontainebleau III will bring the hotel complex back to its original capacity of about 1,200 rooms, Muss said, since it will go up at the site of the old Sorrento Hotel, a 300-room hotel on the Fontainebleau complex. The Sorrento was closed when construction on Fontainebleau II began. 

The projects are joint ventures between the Fontainebleau and Aventura-based Turnberry, which says it has sold more than 80 percent of the Fontainebleau II units since launching sales in 2001. 

"Phase I has been a huge success," said Aztec Group Chairman Ezra Katz, an investment banker who said he was not involved in the Fontainebleau deal. "It exceeded everyone's expectations." 

Though it has lost some of its old glory, the Fontainebleau remains one of the best-known hotels in Miami Beach, and its popularity and reputation have boosted sales of the condominiums there, industry analysts and executives close to the project said. 

"The Fontainebleau has been around all these years, and people know it worldwide," said Bruce Weiner, president of Turnberry Associates Residential Division. "When you say Miami Beach, you think Fontainebleau." 

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