Dow Hotel to Manage Downtown Property

SAN FRANCISCO-Justice Investors has handed management of its 26-story Holiday Inn Select Downtown Hotel & Spa San Francisco to Tukwila, WA-based Dow Hotel Co. The 565-room hotel has been leased since 1998 to publicly traded FelCor Lodging Trust Inc. That lease expires July 1, at which time Dow Hotel’s management assignment begins.Although Dow Hotel typically likes to have an equity stake in the hotels it manages, Dow Hotel president Murray L. Dow II tells GlobeSt.com that Dow Hotel did not take an equity position in this property and isn’t providing any of the funds for the renovation as part of the deal. “It’s a straight management assignment,” he says. As such, Dow says his hotel company will receive a fee based on a percentage of gross revenue, as well as performance incentives.”It isn’t the perfect business model, but we like the asset and think it has a lot of potential,” Dow tells GlobeSt.com. “It is our first major downtown hotel, and with the major renovation planned it’s an opportunity to show what we can do.”Indeed, in addition to managing the hotel the company will oversee a $15-million renovation of the property set to start this fall and be complete one year later. Typically, a major renovation like this is completed in order to raise rents and meet the requirements for obtaining a more upscale brand. President Dow declined to comment on whether a re-flagging would occur post renovation, but he did say the plan is to nearly double the daily room rate from the $90 range to the $175 range. “We will be trading out customers,” he says. “What we’d like to do is trade up for more of the business travelers.” Located at 750 Kearny St., the 27-story building features city and bay views, and a rooftop swimming pool that first gained acclaim as the setting for the opening scene in the Clint Eastwood movie “Dirty Harry.” In addition to guestroom and lobby renovations, the renovation work will include a makeover of the Chinese Cultural Center on the hotel’s third floor, including the addition of a 5,300-sf ballroom for use by the Center and the hotel. All told, the hotel will have 18,000 sf of meeting space.Dow says the renovation will restore the hotel’s reputation as one of the city’s best upscale hotels. “Historically, the hotel has not had adequate meeting space for its size; this renovation will address that issue,” he says. “We are immediately creating a hotel sales and marketing organization to support our expanded meeting space ….”The renovated lobby will include a new bar and a restaurant that will be relocated from the second floor. The former restaurant will be converted to additional meeting space. The exterior entrance also will be redesigned and all guest rooms will be refurbished with new bathrooms, soft goods, premium bedding and furniture, television sets and heating and air conditioning. High speed Internet access will be added to all rooms, and security will be enhanced with a new electronic locking system. Additionally, the health club will double in size and a concierge lounge will be added on the 27th floor and the hotel will feature about 40 concierge-level rooms. The hotel will remain open during the renovation process, which will be done floor-by-floor, with three floors out of commission at a time in order to provide a one-floor noise buffer both above and below the renovation work. The guestrooms’ renovation will be the first phase of the renovation. The lobby and meeting room renovations will start after the rooms are completed and will take another nine months to complete. The recently completed Tru Spa will be unaffected by the renovation. The Dow Hotel Co., headquartered in Seattle, is a national hotel owner/investor and operator of hotels. The company’s nine-hotel portfolio of owned and managed properties is comprised of institutional grade hotels under such brands as Hilton, Embassy Suites, Sheraton, Crowne Plaza, Doubletree and Radisson. The addition of San Francisco hotel is the second part of the company’s ongoing West Coast expansion plan, which began late last year with the acquisition of The Crowne Plaza Portland in Lake Oswego, OR. In January, the company said it plans to cut three new deals this year for full-service hotels in Seattle, San Francisco or Los Angeles that have between 200 and 500 rooms and extensive food and beverage capabilities.