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The Fontainebleau Won’t Be a Hilton

Question

I recently heard that the Fontainebleau Hotel's new owners have announced that they will drop the Hilton name and franchise. This decision obviously raises questions about what will happen with the newly built Fontainebleau II and the to-be-built Fontainebleau III Ocean Resort in Miami Beach, both of which are condo hotels, built adjacent to and as part of the Fontainebleau Hotel complex. Can you shed any light on the situation?

Joel's Response


Yes, you heard correctly. On Feb. 14, 2005, new Fontainebleau owner Turnberry Associates announced plans to run the 1,400-room resort itself, saying the world-famous Fontainebleau doesn't need the marketing muscle or name recognition of a major hotel brand like Hilton.

The decision will leave the region's largest resort without the global sales force, multimillion dollar marketing campaigns, loyalty programs and aggressive Internet presence that comes with a national hotel chain.

On the other hand, the highly successful, Aventura-based company won't be burdened with a costly operating contract or risk having the storied Fontainebleau's image linked to a national brand's reputation.

It also could mark the first step in Turnberry's effort to turn Fontainebleau into a national hotel brand with its own following. In his first interview announcing the Fontainebleau purchase last month, Jeffrey Soffer hinted the company might open other Fontainebleaus, saying: "I think the Fontainebleau name has got tremendous legs to it. In fact we might be looking to continuing that on." Thus the Fontainebleau will be the first resort Turnberry will operate itself, but it probably won't be the last.

Turnberry is best known for a resort it no longer owns: Turnberry Isle in Aventura, which it sold in the 1990s. It currently owns and operates several Marriott-branded hotels in Aventura and Orlando and a high-end Hilton in Nashville.

Turnberry is building condo hotel components for the MGM Grand casino in Las Vegas and the Atlantis resort in Nassau, Bahamas, but it will not be operating them.

So now you have the facts, but I wanted my very knowledgeable contact at the Fontainebleau to weigh in with his opinion on the situation. I posed the following question to Reiner Perez, Senior Sales Executive: "Will the Fontainebleau II and Fontainebleau III still be Conrad Hiltons as planned, or will these buildings be non-franchised now?"

Reiner's reponse was: "They will not be Hiltons. Turnberry Hotel Group, Inc. will announce who they will bring in. It is no secret that Turnberry owns a few Marriott Hotels, and J.W. Marriott will be a strong candidate.

Turnberry will now put $150,000,000 into renovations. They are going to bring in the brand name restaurants and stores and make this multi-complex the only LasVegas-style hotel in Florida.

Simply put, Hilton is just not prepared to run a mega-style resort. They have done a good job with the hotel for 30 years; however, we now have two luxury towers and a major resort to run. All in all, it is the best thing that could ever happen to the Fontainebleau hotel. Just the name alone, has the power to bring in the customers.

Turnberry is well aware, that the management program is crucial to the majority of the customers. This is why they are planning to set in motion the new management strategy. The details should be announced within the next few months."

* The above question was submitted via e-mail by a visitor to www.CondoHotelCenter.com. The answer was prepared by Joel Greene, a licensed real estate broker with Condo Hotel Center which specializes in the sale of condo hotel units and fractional ownerships in private residence clubs.

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