Checking In With Loews CEO Paul Whetsell

WhetsellAfter spending more than $250 million in renovations last year, the Loews Hotels & Resorts system is in better shape than ever. Now that all the hard work is out of the way, President and CEO Paul Whetsell is relieved to put the focus back on operations. At the 36th annual New York University International Hospitality Industry Investment Conference earlier this month, Whetsell discussed everything from Loews’ purchase of the Graves 601 Hotel in Minneapolis and progress on the Cabana Bay Beach Resort in Orlando to the company’s plans to open a 400-room property in Chicago next year and its latest tech initiatives.

When I spoke with you at IHMRS last year, you were focused on getting the big renovation on the Loews Regency in New York City done in time for the Super Bowl. How did that go?
We hit it. Unfortunately, the Super Bowl didn’t generate the business everybody hoped for. When you think about it, the Super Bowl has become a big corporate event and a lot of corporations are already here in New York City. The media is already here. The people who normally go to New York on the weekend to shop and see shows were probably scared off. My wife and I were walking around the city on the Saturday before the Super Bowl and nobody was on the streets.

Still, we hit the date and business has been steadily picking up, and we’re really happy with where we are there. If you haven’t been to the Regency lately, it really turned out great. I think it’s the best 4.5-star hotel in the city. It has a really active restaurant and bar scene and the rooms are great. A $100 million renovation will do that.


And that wasn’t the only big multi-million dollar renovation Loews undertook last year.
Yeah, last year we spent over $250 million renovating our system. It was a lot of work and a little disruptive to us, but I think I’m pretty safe in saying that our system has never been in better physical condition than it is today. So I don’t let the operating guys make excuses about how they’re performing. This year we wrapped up some of that work in the first quarter—I think we opened four new restaurants this year already. I just want the renovations to be all behind us so we can just operate. That’s the important thing.

And now you’re in the acquisition mode.
We just announced a deal last week, and we’re buying up in Minneapolis. Good hotel, 255-room property right downtown on the skywalk system across from the Target Center, which is where the Twins and the Timberwolves play. It’s just a great asset for us, and we’re excited about that. We’ll close at the end of this month.

How is the Cabana Bay Resort project in Orlando going?
We opened 600 rooms in March, and we’ll open up 1,200 more rooms soon. When it’s all done, we’ll have 1,800 rooms total. Since we’re inside the park at Universal, we’re running at 90 percent occupancy since the 600 rooms opened in March.

That’s amazing.
It is. I mean it’s like, no stabilization; you’re just booking from day one. It’s great to be inside the park since you get a huge market share from what’s all ready there. Universal is also adding a second Harry Potter theme park, and that’s going to help us substantially. When this project is done, we’re going to have a total of 2,400 rooms inside the park. It’s all transient too. There’s no meeting space in the whole hotel.

Can you tell me about the project going up in Chicago?
Yeah, it’ll be a 400-room hotel right off Columbus, parallel to the park, and it will open February of 2015. It’s a block off the river and with sight lines right to the Navy piers. We’ll own that hotel outright so it’s going to be a great project. We are booking well there so it’s going to be exciting.

Loews has a several properties in prime city center locations but no convention center hotel. Why is that?
We like to be close to convention centers, but not connected. Convention center hotels like the Marriott Marquis that just opened in Washington, D.C., need to commit a certain percentage of their rooms to the city’s convention center. We’re much more focused on what we call self-contained groups, so we spend more of our time booking groups that we have a little more control over. This allows us to be a little bit more selective on the way we’re booking and hopefully a little bit more successful. I also think the convention center business itself has not been as robust as other parts of the industry. Attendance has been decreasing for the really big groups that need to go to convention centers, whereas the self-contained groups have been increasing.

What’s happening on the tech front for Loews?
We’re taking a hard look at what our in-room entertainment providers are going to be. We’re going to make decision this summer because to get it installed in our properties, we need to make a decision here pretty quickly. But it’s tricky right now. Especially for an old school guy like me to bring people in that speak a language I don’t speak.

It’s an expensive proposition especially when you install a whole new system and don’t have a way to directly capture money from it.
As a matter fact, there is an enhancement that you can add to your building for telephone connectivity called DAS. I don’t know what it stands for, but it’s to enhance cell phone service. We have to do it to enhance our buildings, and you’d think the carriers would pick up the tab, but they don’t. Now there are some providers that will enhance the coverage and then they go to the providers like the AT&T and get them to pay some fee. There is all kinds of stuff like that going on today that we didn’t have to deal with 10 years ago.

So you’re spending extra just for guests to use their cellphones?
Yeah, because they don’t use your guestroom phones anymore. They might use it to order room service. That’s about it. That’s why we’re revising our mobile app and TVs so people can order room service and make requests through them. The phone really is not as important as it used to be. I’m sure the other hotel companies are doing the same thing.

Can guests book rooms through the mobile app?
No, not yet. That’s one of my frustrations. Every time we decide to roll the app out, our guys say we have to add this and that. Then it’s all tested at our properties because when you allow people to order room service or do different things, you have to be able to handle it operationally. As a matter of fact, our app will allow people to sit in the lobby and order drinks and do what they call bump printing, so they can print it off of their mobile device. We’re testing it in our properties to make sure that our staff can handle and support these new things.

It must be a little bit easier given Loews’ ownership stake in its properties to roll out these new initiatives.
It’s much easier to be in control versus any of the other big brands; they have to convince their franchisees that they should be doing something. From somebody who sat on the other side of the table the big brands most of my career is refreshing. When people come to me and say, “You know what, it’s not a brand standard.” I say, “OK, then let’s just change it.” It’s a little bit easier for us. We just did a major look at our brand standards and revised them in both the operating and on the product side.

What’s your outlook for the year?
Business is good. Deals are a little harder to come by, and nobody is being pressured to sell. It’s all good. I don’t think it’s going to change. I think we got a good three or four years before we do something stupid like build too many hotels.