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Best of Benjamin Spillman
Benjamin Spillman

No glitz or glitter for Loews

25 January 2007

LAS VEGAS, Nevada -- Jonathan Tisch won't be putting his name on a massive hotel tower, isn't feuding with rival operators and plans to use subtle charm instead of slot machines to attract visitors.

Not the type of business titan one would expect to find eager to make a mark on Las Vegas tourism.

But that's exactly what Tisch, chairman and chief executive officer of Loews Hotels, intends to do -- and soon.

In November, Loews announced it would take over the 493-room Hyatt Regency Hotel at Lake Las Vegas and has been instilling its own brand of service and style on the property since, including shuttering the small casino near the lobby.

"We are not competing with The Venetian or the Wynn (Las Vegas)," said Tisch, who visited the property this week to rally employees and review progress. "We are going to leave the casino business to others."

Loews Hotels is a family-run operation with 18 properties in places such as New York City, New Orleans, Los Angeles and San Diego. It is part of a larger conglomerate called Loews Corp.

In addition to the hotel chain, the parent owns tobacco company Lorillard, maker of Newport and Old Gold cigarettes; the insurance company CNA; offshore drilling company Diamond Offshore; and wristwatch company Bulova.

In addition to his title with Loews Hotels, Tisch is co-chairman of the board of Loews Corp. He is also a member of U.S. Travel and Tourism Advisory board and author of a popular business book "The Power of We: Succeeding Through Partnerships."

Asked whether the cooperative business style touted in the book would fly in Las Vegas, a community built on ego, bravado and the misfortune of tens of millions of losing gamblers, Tisch said it would. He specifically cited prominent casino operators Steve Wynn of Wynn Resorts Ltd. and Sheldon Adelson of Las Vegas Sands Corp., two men known for brash business decisions and intense competitive instincts.

"I know them all. We are good friends," Tisch said. "There is enough business for everybody."

Tisch's soft-spoken, self-deprecating style was on display during his recent visit to Loews Lake Las Vegas.

Before he spoke on stage, giant video screens played excerpts from a reality television show called "Now Who's Boss," in which executives performed front-line jobs in the companies they run. In his scenes, Tisch, who grew up in the hotel business, made more than a few gaffes performing kitchen, laundry and housekeeping tasks that look easy for front-line employees.

"I can make a lot of decisions that affect Loews Hotels; you are the ones who every single day are there interacting with our customers," Tisch told employees during the talk, which had the feel of a pep rally. Employees were in costume, swinging noisemakers and homemade signs and banging pots, utensils and plate covers like cymbals.

But Tisch was also criticized on labor issues in 2000, in part for opposing a living wage initiative in Santa Monica, Calif. Union activists supporting organization of about 300 housekeepers and other workers built puppet caricatures of Tisch and found him guilty in a mock trial outside the Loews Santa Monica Beach Hotel, according to press reports.

The timing coincided with Loews' opposition to a living wage proposal in Santa Monica. The Los Angeles Times reported Loews was the biggest financial backer of an alternative proposed ordinance that would have exempted hotels and restaurants, contributing $125,000. The company also sent money to anti-living-wage candidates for the Santa Monica City Council, the paper reported.

A spokeswoman for Loews said Tisch had no comment on the California labor issue.

Bjorn Hanson, a hotel industry consultant for PricewaterhouseCoopers, said the situation wasn't a surprise considering Tisch is known for taking strong stands.

"Jonathan believes in what he believes," Hanson said. "He has very thoughtful positions."

In general, Hanson said, Tisch is known for boosting employee morale and operating hotels that receive high marks for service and customer loyalty.

"He is an icon of the industry," said Hanson, who added he expects Loews would manage the Lake Las Vegas property with investment, not deep cost-cutting, in mind.

"It is professional management as opposed to cost cutting," he said.

The move to Lake Las Vegas in Henderson adds another name to the list of resort communities where Loews Hotels operates that already includes Miami Beach, St. Pete Beach and Orlando in Florida and Tucson, Ariz. The company originally planned to build its own Henderson property from scratch but changed course due to high construction costs in Southern Nevada.

"It was prudent financially to purchase this hotel," said Tisch, who had earlier told employees, "We are very conservative. We don't do silly things."

The company joined with a private investor who contributed 75 percent of the equity in the Hyatt Regency at Lake Las Vegas, with Loews contributing 25 percent.

The hotel chain says it will invest about $5 million upgrading the property. So far the removal of six table games and 160 slot machines from the Bakara ballroom is the most visible evidence of changes at the eight-year-old hotel in Lake Las Vegas.

More changes are on the way. Loews plans to import a business model that emphasizes understated resort-style decor, intimate service for guests and a serene atmosphere with golf courses and desert scenery.

Some of the chain's signature touches include frozen grapes, cold towels and lemonade served poolside on hot days.

Loews also renamed the Japengo sushi restaurant as Marssa, but retained executive chef Fuji Fujita. Loews spokeswoman Rosalind Ann Napoli said the restaurant and spa were the only departments in the hotel that didn't lose any workers during the transition, although defections were low in other departments.

During a rally this week in a hotel ballroom, Tisch, Chief Operating Officer Jack Adler, Loews Lake Las Vegas Resort managing director Dale McDaniel and other company leaders sought to assuage concerns about the takeover among the hotel's approximately 450 workers.

"We are not here to change you," Adler said. "What we are here to do is to really kick it up a notch."

The company wants to increase the hotel's occupancy, but wouldn't say whether the current rate is higher or lower than Las Vegas' industry-leading occupancy, which was 89 percent in 2005. The national average hotel occupancy in 2005 was 63 percent, the American Hotel & Lodging Association reports.

Napoli said Loews properties in New York City and Santa Monica rival the occupancy rates for Las Vegas.

Tisch said the company has no plans to expand the size of the hotel with a new tower or revive the gaming operation, both common methods of increasing revenue for Nevada hotels. The hotel will instead focus on expanding a growing list of corporate and convention contacts as well as leisure travelers who have no desire to stay close to the din of the Strip.

Loews considers hotels in places such as Palm Springs, Calif., and Scottsdale, Ariz., as competition for Lake Las Vegas, not the Strip or downtown Las Vegas.

"We got rid of the casino," Napoli said. "Part of the decision was to create a more relaxing environment."

During this week's visit, Tisch also said he envisioned changes to the hotel's point of arrival as a way to improve overall satisfaction for guests. He said entry-point improvements pay dividends at checkout time, when guests are paying their bills and evaluating whether they received good value for their money.

"Your first impression when you walk through the door is very important to the rest of your stay," he said.