Knight Ridder/Tribune Business News
Oct. 25, 2005 - Le Meridien Chicago hotel is close to being sold to a group of investment firms that will reflag it a Conrad, an emerging Hilton luxury brand that is poised for a major expansion.
The deal would reintroduce the Conrad name to Chicago, where it was an icon for many years.
The 311-room hotel at 521 N. Rush St., above the North Michigan Avenue shopping center anchored by Nordstrom, is expected command a price in the upper-$80 million range, said sources close to the deal which is expected to be announced early next month.
The group of buyers is expected to include Chicago-based Walton Street Capital, whose principals include real estate veteran Neil G. Bluhm; New York-based Westbrook Partners LLC; Lodging Capital Partners, of Chicago, according to the sources.
Spokespersons for the three firms declined comment, as did a representative of Hilton.
Starwood Hotels & Resorts Worldwide Inc. has a deal to buy and operate the London-based Le Meridien hotel chain, but that deal does not include the Chicago property. The Chicago property was developed by a joint venture of John Buck Co. and Morgan Stanley Real Estate Funds Inc. as part of The Shops at North Bridge complex.
If Le Meridien Chicago were to be sold for $85 million, that would amount to $273,312 per room. Earlier this year, the InterContinental Chicago, on the other side of Michigan Avenue, was purchased for more than $210,000 a room.
The Hilton Chicago, the huge convention hotel at 720 S. Michigan Ave., was known as the Conrad Hilton between 1952 and 1985. It was named for Conrad N. Hilton, founder of the Hilton chain, who in 1945 purchased the property, which had opened in 1927 as the Stevens Hotel.
The new Conrad, on North Michigan, is part of a network of luxury hotels and resorts founded in 1982.
The conversion to the Hilton brand should be a plus for the property, said one observer.
"Le Meridien doesn't have the representation in the U.S. to give it a recognition, and the Chicago location is a bit obscure," said Elmhurst-based hotel consultant Ted Mandigo. To enter the hotel from Michigan Avenue, customers have to walk through the mall to reach an elevator that takes them to the hotel lobby.
"It has not had a stellar performance in the market," he said. "It has struggled with its identity."
Hilton's global reservation system, along with its marketing push behind the emerging Conrad brand, should drive more business to the Chicago property, Mandigo said. And the Conrad name should have some built-in recognition here, he added.
"It's a wonderful property, with nice rooms, but, boy, you have to know it's there," he said.
Conrad Hotels, based in Brussels, manages 18 properties worldwide, including The Waldorf Towers in New York and the Conrad Miami. Seven more are in development, including one to open next year in Indianapolis and one to open in 2007 in Las Vegas. The Chicago deal would add one more to the roster.
The brand aims to compete at the highest levels, taking on such brands as Four Seasons and Ritz-Carlton.
Since 2000, expansion of the Conrad brand has been a joint venture between Hilton Hotels Corp., the North American hotel giant, and Hilton Group PLC, whose Hilton International has rights to the Hilton brand overseas.
Earlier this month, it was reported that Hilton Hotels is in talks to acquire Hilton International.
By Kathy Bergen and Thomas Corfman
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