"I like to see an old building come alive," says hotel executive John Coleman. "And I like to see people enjoy it."

Since 1974 Coleman has brought three old buildings back to life and converted them into small, luxurious and profitable hotels.

Following the success of the Whitehall and Tremont hotels in Chicago, Coleman and Co. came to Washington in 1977 and bought the Fairfax, a residential hotel built in 1924. Coleman spent about twice the purchase price of $5 million to renovate the Fairfax, which reopened last year. Now he's planning to expand it.

The interior, including the Jockey Club restaurant, was gutted and reworked in meticulous and expensive detail. The hotel's 200 rooms were furnished with Federal period reproductions and decorated with original paintings. Oriental rugs, hardwood floors, brass chandeliers and hand-carved cornices give the Fairfax a subdued elegance and a sense of intimacy not found in most larger hotels.

Coleman says his hotels are not for everybody. They are tailored to business executives who want those little extras when they travel. Before retiring, each guest finds a chocolate mint and a glass of cognac by the bed; a night butler service is available to take care of any emergency at any hour, such as a suit that needs pressing. Extravagant? Maybe. But good for business, Coleman says.

Coleman concedes that he couldn't provide the same degree of attention and service if his hotels had more than 350 rooms. He says he is also disproving the conventional wisdom in the hotel industry that a small, independent hotel can't succeed.

"In this time of really difficult financial conditions, one major bank loaned us $20 million without any requirement that we be affiliated with a major chain," Coleman said.

Rates at the Fairfax range from $79 a night for a single room to $450 for one of the 18 suites. The average annual return on a room at the Fairfax is about $40,000, Coleman says, compared with an industry average of $12,510. This year his total revenues will exceed $7 million, Coleman said.

Later this year 110 rooms will be added and public meeting space will be increased three or four times. Coleman and Co. recently began work on its fourth hotel property, the 260-room Navarro on New York's Central Park South.

Coleman has chosen his locations carefully. "I know of no other city that has the dynamism of Washington, Chicago or New York," he said. "People have to go to those three cities if they're doing business in this country."

Pleased with the reception the new Fairfax has received in Washington, Coleman says he is expressing his appreciation by donating 5 percent of his profits to local charities. "It's a hell of a lot better than advertising," he said. "It's the most important thing we can do."