A New Day at Loews
This isn't a story about expansion, even though Loews Hotels hopes to nearly double its current 18-property portfolio in the next five years. Rather, it's a story of how a chain is able to leverage its roots and corporate culture to fuel effective expansion; that is, adding the right properties in the right locations that make economic sense for the company and its financial partners.
About two years ago, Jonathan Tisch, the indefatigable chairman and CEO of Loews Hotels and co-chairman of parent company Loews Corp., approached Jack Adler with a challenge: determine where Loews is in today's hotel marketplace and where it is headed tomorrow. Adler, president and COO of Loews Hotels and a 20-years-plus veteran of the company, launched a far-reaching corporate soul-searching mission to answer Tisch's questions.
“The findings largely confirmed what I thought,” says Tisch. “Loews has tremendous loyalty among both our guests and our employees. Our guests also told us they want Loews properties in more locations.”
But before triggering a full-scale, and perhaps haphazard, expansion plan, Adler and his troops made sure the brand had the operational and marketing systems in place that would allow it to nearly double in size in fairly short order. New initiatives covered everything from sales and marketing to human resources to guest enhancements.
But the core of all of the moves is found in the chain's brand promise, which emphasizes comfort; a vibrant look and feel; and a uniquely local experience, a key element for a chain like Loews that deliberately eschews cookie-cutter properties for ones that embrace their environments. Indeed, the flagship Regency Hotel on Park Avenue in Manhattan is distinct from the Loews Ventana Canyon in Tucson as well as the Don CeSar Resort in St. Petersburg Beach, FL. Yet, all 18 hotels, including two in Canada, are four-diamond or better in quality while reflecting the brand's ambitious promise.
Loews has been in the hotel business for more than 60 years and so understands that the business begins and ends with people, both management and line-level employees. As a result, several of the corporate initiatives center on various aspects of training. In the past two years, the chain has tripled its training budget and the number of training hours for employees.
A key element is Genuine Personal Engagement, a program that teaches employees how to read guest moods to help determine their needs. Another is Loews Link, a communications process to filter information from headquarters to regional executives to the property level because, as Adler says, “It's important that everyone in the company understands the brand promise and how to deliver it.”
Special emphasis is also given to management through the Living Loews executive training program, a two-day immersion into the skills GMs and middle-level managers need to succeed and to fulfill the brand's promise. The curriculum covers communication, presentation, salesmanship, public speaking, even dress and etiquette.
This kind of training paid off recently when Loews assumed management of The Madison in Washington, DC. At takeover, the company was able to leverage its bench strength by placing five managers from other properties in the chain on the Madison's executive committee.
Other initiatives center on the guest. “We've upgraded the arrival experience by, among other things, using the guest's name whenever possible,” says Adler. “It's important that guests feel a personal connection to the hotel at that initial contact.”
Breakfast at Loews, a new branded breakfast program that features custom-shaken juices and French press coffee, is another way to standardize the guest experience across an eclectic hotel portfolio. At the same time, the morning menus also feature regional dishes to infuse individuality. High-quality food and beverage has always been a hallmark of the chain, and it's often done through partnerships with celebrity chefs (e.g., Emeril Lagasse) or celebrities, like musician Michael Feinstein at the Regency in New York.
Another addition: nightly turndown service, an amenity Adler calls “the best way for guests to feel supremely comfortable, which is part of our brand promise.”
Last fall, Loews kicked off a new ad campaign with the tagline “You Are Here.” Loews research revealed that the brand appeals to younger guests, and the print, direct mail and web campaign is targeted at that demographic.
WHERE GUESTS WANT LOEWS
Veteran hotel development executive Glyn Aeppel recently joined Loews to spearhead its expansion ambitions. Her mission is to add Loews Hotels, either through acquisition or management, in a string of important destination markets. Key criterion is that all hotels must be four diamonds or higher, or have the potential to achieve that level of quality through renovation and management.
Ideally, the chain would like to add properties in as many as 23 North American locations, but there's no timetable. For now, the company has no desire to return to Europe or elsewhere outside of the Americas.
“We want to do smart deals, not a certain number of transactions per year,” says Aeppel. A prime example of a smart deal is the firm's recent addition of the former Hyatt Regency Lake Las Vegas. Along with a silent majority investor who will also work with the company on future deals, Loews purchased and assumed management of the 493-property late last year. The chain had previously announced plans to build a property in the same residential-hospitality community 17 miles from the Las Vegas Strip. Rising construction costs, the availability of the Hyatt project and Loews' nimbleness provided the acquisition opportunity.
According to Aeppel, Loews has a three-pronged growth strategy. One is to find locations in major urban centers where Loews presently doesn't have properties. Major focus will be in Boston, Atlanta, Chicago and San Francisco. It will also seek properties in resort locations, including ski destinations like Aspen and Vail. Finally, it hopes to expand in Canada (it currently has locations in Montreal and Quebec City), specifically Toronto and Vancouver, and into Mexico, probably Cancun and/or Los Cabos.
Much of the expansion will be fueled through joint-venture acquisitions with its investment partner, of either individual properties or portfolios of assets. The partnership has $300 million in equity and about $800 million in buying power. Loews has a 25-percent stake in the venture, which Adler says that “unlike opportunity funds that have a three- to five-year vision, our partnership will take a long-term perspective.”
It will also seek management contract deals, a segment of the business in which Aeppel believes Loews enjoys a distinct advantage. “Being relatively small and well-focused can help us in these deals because we can give owners lots of personalized attention,” says Aeppel. “And, of course, our track record of success is another plus.”
Loews will probably succeed in its strategy for several important reasons. As a prime example of the long-standing tradition of family-owned or -controlled companies in the hotel business, Loews is able to balance the dollars-and-cents side of the business with the importance of serving the needs of guests. It's a task that faceless and soulless financial owners often have trouble achieving.
And in many ways, the Loews chain remains the heart of Loews Corp., a diversified $24-billion company with interests in everything from tobacco to energy to insurance to watches, as well as hotels.
“Even though it only accounts for about three percent of the enterprise, Loews Hotels enjoys the full emotional and financial support of the parent company,” says Tisch. “Everything I learned came from my uncle (Laurence) and father (Preston Robert), who founded Loews in 1946 first and foremost as a hotel company.”
THE BIG IDEAS
Loews Hotels has been busy since 2002, when it opened the Royal Pacific Resort, the last of its three properties at Universal Orlando. The chain is the only brand at the attraction and controls nearly 2,500 rooms at Universal.
Other moves since 2002:
Acquired a 20-percent interest and assumed management of the 347-room Don CeSar Beach Resort and Spa in St. Pete Beach, FL;
Opened the 285-room Loews New Orleans;
Refinanced $600 million in the Loews Orlando portfolio and the Loews Miami Beach Hotel;
Assumed management of The Madison, a Loews Hotel, in Washington, DC;
Purchased and converted a former Hyatt Regency to the Loews Lake Las Vegas Resort;
Launched major renovations at many Loews properties, including the addition of spas at the Miami Beach and Don CeSar locations, and started installation of flat-screen TVs in all of the chain's rooms.
Relinquished management of properties in Chicago, Beverly Hills and Washington, DC.
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