Hilton luxury brand set for Vegas

By Liz Benston (contact)

Tuesday, July 8, 2003 | 11:24 a.m.

Conrad Hotels, a new high-end brand under the Hilton chain of luxury hotels, expects to sign management agreements to run various hotels across the country including Las Vegas, San Diego, Seattle and Indianapolis, the Hilton hotel company said today.

Hilton made the announcement in conjunction with news that Conrad Hotels has signed an agreement to manage its first newly built, free-standing U.S. hotel in Miami. The 203-room Conrad Miami, owned and developed by Estoril Inc., will open in January 2004. The property joins other Conrad hotels in London, Hong Kong, Bangkok, Brussels and New York.

Conrad resort and spa hotels also are scheduled to open in Bali, Indonesia, by February 2004 and in Phuket, Thailand, in November 2004. The company said it is also looking at other opportunities in Europe and the Middle East.

Conrad officials declined to reveal details about future management agreements in Las Vegas and other domestic cities.

A Conrad hotel in Las Vegas would add to a growing list of traditional luxury hotel brands in the region, including the J.W. Marriott Las Vegas in Summerlin, the Four Seasons Hotel next to Mandalay Bay on the Strip and the Ritz-Carlton and Hyatt hotels at Lake Las Vegas in Henderson. The Four Seasons has had a consistently high occupancy rate from visitors who prefer smaller, non-casino hotels, while its off-Strip counterparts have witnessed occupancy rates that are lower than major casinos yet high for the luxury hotel market, hotel analysts have said.

The success of these smaller hotels and the presence of top-flight brands like the Ritz, which opened in February, is likely to bring competitiors to the region, they have said.

A Conrad deal in Las Vegas probably won't mean building a new hotel but will more likely take the form of a management agreement with an existing property, said Joe Greff, a hotel and casino industry analyst with Fulcrum Global Partners.

Moreover, hotels attached to successful casinos with proven amenities such as convention space, entertainment and restaurants -- instead of stand-alone properties -- have better prospects in the nation's gambling capital, he said.

"We'd rather bet on the Bellagio spa tower, the new Venetian tower or the new tower coming up at Mandalay Bay" rather than large, traditional hotels, Greff said.

"It depends on whether it's another 2,000 rooms," he said. In that case, it "probably would not be successful unless it has a successful casino," he said.

Conrad Hotels is a joint venture between Hilton International and Hilton Hotels Corp. Hilton Hotels Corp. of Beverly Hills, Calif., manages and develops more than 2,000 hotels, resorts and timeshare properties across several brands, including Hilton Hotels, Hilton Garden Inn, Doubletree, Embassy Suites and Hampton.

Hilton Hotels is already a big player in the Las Vegas tourism industry with three big timeshare projects, several Doubletree, Embassy Suites and Hampton Inns and its relationship with its sister company, gaming giant Park Place Entertainment Corp., which was spun off from Hilton in 1998.

Hilton International is an operating division of U.K.-based Hilton Group Plc., which owns the rights to the Hilton brand outside of North America. Hilton International operates more than 400 hotels under the Hilton, Scandic and Conrad brands.

"This growth further validates our luxury hotel management expertise," said Dieter Huckestein, president of hotel operations for Hilton Hotels' owned and managed properties. "In North America, the success of re-branding the Waldorf Towers, Conrad's first property in the United States, was closely watched by the industry. Now is an ideal time to grow the Conrad portfolio in the U.S. and in all other key markets," he said.