New Yorker hotel resorts to franchise;

Joins Ramada chain in effort
to draw business travelers; will it pay off?

Monday, November 29, 1999,
by Larry Kanter
Crain's New York Business

In a bid to burnish its downscale image and attract more business travelers, midtown's venerable New Yorker Hotel is joining the Ramada hotel chain.

Although the 70-year-old hotel -- which is owned by Rev. Sung Myung Moon's Unification Church -- has been popular with international and leisure travelers since it reopened for business in 1994, it has had a difficult time luring higher-paying corporate clients. New Yorker executives hope that flying the Ramada flag will help shift that balance.

The idea is to change our market mix, says Barry Mann, the hotel's general manager. We're expecting a tremendous volume of corporate business.

Church tie remains

Beginning in January, the New Yorker will become a franchisee of the Ramada chain. The church will continue to own and operate the hotel. Ramada -- which is strictly a franchising organization, neither owning nor operating any of the approximately 1,100 hotels that bear its name -- will provide marketing, quality control and employee training services.

Such assistance won't come cheap. Ramada franchisees pay an average of 8.5% of their gross room revenues in exchange for access to the chain's marketing and operational expertise. If enough new business does not come through the doors, the deal could well wind up being a wash for the New Yorker.

Worth the risk

But Mr. Mann, who has just helped supervise a four-year, $30 million renovation of the hotel, says he is willing to take that risk.

Currently, about 65% of the guests at the 1,005-room New Yorker are leisure travelers. Many of those visitors are from Europe, South America and Asia, and a good number of them purchase their rooms at discount prices through tour wholesalers. The remaining 35% of guests are the higher-paying business travelers that the hotel covets.

Mr. Mann expects the franchising deal with Ramada -- which will include a major worldwide marketing campaign -- to flip those figures. Even if business travelers pay just $25 a night more, such a transformation could boost the hotel's bottom line by as much as 200%, he says.

For Ramada, the franchising deal marks the beginning of a nationwide drive to add large, convention-style hotels in major urban centers to the 1,100-hotel chain, which operates predominately middle-market properties.

Currently, the chain's only Manhattan hotel is the Milford Plaza, although it is expected to drop that property as a franchisee by next September. Other larger-scale Ramadas are expected to open next year in New Orleans, Boston and Chicago.

We've put together a $30 million plan to position the Ramada brand in the mid- to upper tier of the market, says Steve Belmonte, president and chief executive of Ramada Franchise Systems Inc., a subsidiary of Parsippany, N.J.-based Cendant Corp. The New Yorker is the cornerstone of that program.

Despite Ramada's enthusiasm, the hotel faces tough competition in its midtown marketplace. The nearby New York Pennsylvania Hotel and the Holiday Inn Broadway, for example, both operate in the same $150- to $300-a-night price range and also are working hard to attract business travelers.

Kick out the tours

Occupancy pressure is so strong that every medium-priced hotel in the city is trying to force the tour groups out, says Thomas McConnell, senior managing director of Insignia/ESG Hotel Partners Inc.

But Ramada is betting that the hotel's proximity to the Jacob K. Javits Convention Center and Madison Square Garden, as well as its recent makeover -- which restores a measure of the hotel's former Art Deco grandeur -- give it an edge over the competition.

The Ramada deal marks the latest chapter in the New Yorker's saga, which has taken more than its share of bizarre twists and turns over the years.

When it was built in 1930 for $22 million, the hotel was the largest in the city and the second largest in the world. Throughout its heyday in the 1930s and 1940s, the hotel attracted a glamorous array of regular guests, including bandleader Glenn Miller and U.S. Sen. Huey Long.

Moonie residence

Hilton Hotels Corp. purchased the New Yorker in 1953, but its popularity began to wane. In 1972, the property was shut down as a hotel, and the French Polyclinic Hospital attempted to convert it into a hospital and medical school. When that plan fell through, Hilton sold the New Yorker to the Unification Church in 1976, for a mere $5.5 million.

For 18 years, the New Yorker was used as a residence for church members. But in 1994, with the city's hotel market heating up, the church decided there was money to be made by converting the property back to a hotel. It hired Mr. Mann, a 30-year veteran of the city's hospitality industry, as general manager, and commercial real estate executive Mark Wilenchik as managing director, and charged the pair with bringing the New Yorker back to life.

It has been a painstaking process. Years of residential use put considerable wear and tear on the property, which turned off many travelers. When it first came back on the market, the New Yorker relied on low-cost foreign tour groups for as much as 80% of its business.

But as the hotel's renovation has gathered steam, so has its occupancy rate. This year, with about 900 rooms available, the hotel expects occupancy of 88%, compared with 86% last year, when just 700 rooms were available.

Now, the challenge will be to fill those rooms with business travelers. And the Ramada connection could make that easier. Even before the relationship has formally gotten under way, Mr. Mann says the New Yorker already has received more than 100 requests for proposals from potential corporate clients.


The Unification Church brought in Mark Wilenchik (left) and Barry Mann to revive the hotel.

August 10, 1999

Radisson Hotels Worldwide today announced the October 1 opening of its first hotel in Uruguay, the Radisson Plaza Montevideo Hotel & Casino. This deluxe, European-style landmark hotel, currently the Victoria Plaza Hotel Conference Center, Casino and Spa is located in the heart of Montevideo, the capital city of Uruguay, in the Ciudad Vieja (old city) on the Plaza Independencia.

"This hotel is especially important in Radisson's expansion into Latin America," said Brian Stage, president of Radisson Hotels Worldwide. "This hotel is located in a very unique location, not only in the center of the city's commercial, cultural and financial district, but also in a historical area that contains the city's most historical structures as well."

The hotel features 253 modern, beautifully appointed guest rooms and suites. On the Plaza Club floors, there are 59 executive suites, six ambassador suites, and one presidential suite. The hotel's 26,040 feet of conference and banqueting space will easily accommodate groups from 12 to 2,500. Each of the conference rooms will be equipped with the most modern technology in audio, video and lighting such as Digital Congress Network for simultaneous translations in up to six languages.

The hotel's leisure facilities allow conference-goers to unwind at the end of the day. The sky-lit semi-olympic pool, Jacuzzi, sauna, solarium, and spa beauty treatments will pamper in an atmosphere of complete relaxation. A gymnasium with state-of-the-art exercise equipment and an indoor track will be available for guests as well.