Only the other day we learnt that Giorgio Armani was planning a £300 million luxury hotel in London. Meanwhile, fashion house Versace has also taken the luxury hotel route with its Palazzo Versace resorts, first in Australia and now in Dubai. It appears that luxury fashion is compatible with luxury hotels. Perhaps that is the reason why American fashion designer Tommy Hilfiger is also planning to cash in on the growing design-consciousness of a hotel industry on the rebound.
The recession had taken the wind out of the sails of the hotel sector. But of late, there has been a resurgence. Room rates are on the rebound again and vacancies are decreasing. For professionals in the lodging industry, this is good news. And talk of Hilfiger also entering the sector may be better news yet.
According to reports, the American designer has teamed up with business partner, JSR Capital, and has inked a deal for the Clock Tower building near Madison Square Park. Apparently, Hilfiger and his associate have agreed to pay $170 million for the office building. The plan is to turn it into a luxury hotel that will attract a younger and moneyed crowd. Sources say Hilfiger might build luxury condos in part of the space.
Hilfiger’s ex-company Phillips-Van Heusen is not part of this hotel deal. The designer who is known for his preppy clothes has apparently been looking to break into the luxury hotel sector for sometime now. Earlier this year, Hilfiger and JSR Capital, a real-estate investment group, were planning to build a hotel on the eight floors of the New York Times building on West 43rd Street. Apparently, they even bid $110 million for the property, only to decide against it soon after.
Both parties also considered the Hotel Chelsea for their purposes before finally zeroing in on the Clock Tower. JSR Capital’s chief Jona Rechnitz was formerly associated with Africa Israel, the company that sold the Clock Tower building. The 700-foot tower by architect Napoleon LeBrun reigned as the world’s tallest building from 1909 to 1913. Initially used by insurance group MetLife Inc., the property was bought by SL Green Realty Corp. in 2005. The firm planned on converting the office space into apartments, but by 2007, they sold it to Africa Israel for $200 million. The firm had initially planned to build this into 50 luxury condos to be designed by Versace, then doubled the plan to 100 condos.
According to Tamir Kazaz, CEO of Africa Israel USA, the company was looking for construction financing, but when it got a good deal from Hilfiger and company, they took it. Kazaz is careful to add that the firm was not in a rush to raise cash – a question that arose since the firm also decided to sell 11 floors of the New York Times building to the Blackstone Group for $160 million. Kazaz claimed the timing was coincidence.
Meanwhile, all eyes will be on Hilfiger to see what kind of design magic he can create in the Clock Tower building. In a resurgent hotel sector, such developments are welcome.