The Madison Hotel, which underwent a $23 million renovation just months ago, is being purchased by Loews Hotels & Resorts in a deal that is expected to close in late January.
Loews operated the hotel until January 2011, when Jamestown Properties, an Atlanta-based real estate investment firm, bought the property and its adjoining office building from Bentall Kennedy for $123 million. The company replaced the operator with Destination Hotels & Resorts, a subsidiary of Lowe Enterprises.
Michael Phillips, chief operating officer of Jamestown Properties, said the company’s original plan had been to make over the iconic hotel, at 1177 15th St. NW, and hold onto it for at least seven years.
“We weren’t planning on selling at all, frankly,” he said, adding that Loews began showing interest in the property about two months ago. “But given the overtures from Loews and their familiarity with the hotel, it made sense.”
The company will retain its ownership of the Madison office building. Phillips would not disclose the hotel’s sale price, but said that it is “not far off” from the widely-reported figure of $145 million.
“The hotel business is not our core business,” Phillips said. “I think the hotel will benefit from being associated with an international flag.”
For Loews, which is based in New York City, the purchase fits into a broader plan to expand into key American cities. The company bought a hotel in Los Angeles earlier this year and has plans to expand into Boston, Chicago and San Francisco.
“Next to New York, Washington, D.C., is the most significant hotel market in North America,” said Peter Whetsell, who became president and chief executive of Loews earlier this year. “It’s a very stable market. It doesn’t go up and down, and it’s got every kind of traffic — leisure, corporate, group. Every association at one time or another is going to come to Washington.”
Whetsell said he had been eyeing the Madison Hotel for years and had originally bid for the property a few years ago, before he began working for Loews.
“The Madison is a great-sized hotel with a nice meeting space,” he said. “It’s a good, stable operation for us.”
The hotel will be renamed the Loews Madison Hotel, Whetsell said, adding that the company is planning to keep much of the hotel’s existing staff.
“For the most part, we won’t make wholesale changes when we come in,” he said. “Quite a few of the staff are staying.”
During last year’s change of hands, union workers led weeks of protests outside the hotel amid complaints that the hotel’s new operator, Destination Hotels & Resorts, had failed to honor existing labor contracts.
This time around, the transition is expected to be smoother, said John Boardman, executive secretary-treasurer of Unite Here Local 25, the union that represents the hotel’s employees.
“From our perspective, we had a little bit of a stumble last time,” Boardman said. “We’re really pleased to see Loews back in this market.”