Clothing designer Tommy Hilfiger, known for his preppy American style, is hoping that same formula can catch on in the increasingly design-conscious hotel industry.

Mr. Hilfiger and a business partner have signed a contract to pay $170 million for the Clock Tower office building near Madison Square Park, planning to convert it into a luxury hotel that will cater to a young, affluent crowd. Mr. Hilfiger’s former company that is now part of Phillips-Van Heusen Corp. isn’t involved in the hotel project.

The project is one of many new hotels under way as the city’s lodging industry recovers from the economic downturn with rebounding room rates and lower vacancies. For example, Yotel, which specializes in small rooms and low rates, is planning to open with 669 rooms in Midtown next month.

Other big fashion names also have expanded into the hotel world. Versace has hotels in Australia and Dubai, and Armani also has hotels.

Some American apparel companies have also explored the concept, says Bjorn Hanson, dean of New York University’s Preston Robert Tisch Center for Hospitality, Tourism and Sports Management. Richard Branson’s newly formed Virgin Hotels is also looking actively in Manhattan for a hotel.

“There are natural affinities between lifestyle hotels and fashion brands,” Mr. Hanson says. While office conversions often lead to unorthodox floor plans, he added, that can work to a boutique hotel’s advantage because “unusually configured rooms, if packaged right, can be very successful.”

Mr. Hilfiger, who is still a principal designer for the fashion company he founded, has been looking to launch a hotel for some time, say people familiar with the matter.

Earlier this year, he and real-estate investor JSR Capital put in a bid of about $110 million for eight floors at the former New York Times building on West 43rd Street to create a hotel there. But Mr. Hilfiger and JSR Capital later changed their mind, according to people familiar with the matter.

The duo also looked at the Hotel Chelsea, which its owners put up for sale last year, but didn’t make a formal bid, say people familiar with the matter. Instead, they have agreed to buy the Clock Tower building, which was sold by Africa Israel USA. Mr. Hilfiger may also convert a portion of the building into condos, say people familiar with the matter.

JSR Capital is lead by Jona Rechnitz, who is the former director of acquisitions at Africa Israel.

The Clock Tower at 5 Madison Ave. was completed in 1909 for use by insurer MetLife Inc. Designed by architect Napoleon LeBrun after the Campanile di San Marco in Venice, the 700-foot tower was the tallest building in the world until it was surpassed by the Woolworth building in Lower Manhattan in 1913.

SL Green Realty Corp. bought it in 2005 with the idea of converting it into apartments but sold it in 2007 for $200 million to Africa Israel, which spent tens of millions of additional dollars on financing fees and preparing the building for construction.

Africa Israel planned to convert the building to about 50 luxury condos with interiors designed by Versace. But the developer later changed gears, opting to sell about 100 condos, or double the initial plan.

“Our plan was to develop it as a condo,” says Tamir Kazaz, Africa Israel USA’s chief executive officer. “We were looking for construction financing but we got a good offer” to sell it instead.

Africa Israel is also an owner of the former New York Times building. Last week, the developer agreed to sell the top 11 floors of that building to Blackstone Group for $160 million. The private-equity firm plans to offer the floors as office space.

Mr. Kazaz said the timing was a coincidence and doesn’t reflect a need to raise cash. He said the Times building had been formally up for sale since last year, and the Clock Tower transaction was an off-market deal without a broker that came together quickly.

Source: hospitality.net

SBeditor