Hotel & Motel Management / October 20, 1997
By Larry Luxner
SAN JUAN, Puerto Rico -- A string of oceanfront properties that had been losing money for years has finally been sold by the Puerto Rican government to a Florida real-estate partnership.
The so-called Condado Trio -- consisting of the 245-room Condado Beach Hotel, the 235-room La Concha Hotel and the enormous but obsolete El Centro Convention Center -- was sold earlier this month to a venture between two Miami-based companies, publicly traded Atlantic Gulf Communities Corp. and privately owned Development Management Group Inc. (DMG).
The team submitted a winning bid of $25 million for its proposed Condado Beach Resort, with a total investment commitment of more than $200 million.
Under the plan, Atlantic Gulf (annual sales: $160 million) will demolish both La Concha and the convention center, building on the vacated spot a 400-room Inter-Continental luxury hotel that includes a 15,000-square-foot casino; it also plans to construct 100 timeshare units attached to that property. As for the Condado Beach, the new owners envision converting the mansion -- constructed by the Vanderbilt family in 1919 -- into 100 to 150 very upscale condominium units. Finally, the group says it'll build Condado Village, a 120,000-square-foot urban entertainment center around a spacious, outdoor plaza fronting the ocean along Condado's Ashford Avenue.
"This is an opportunity to do a unique project in the Caribbean," said Brian A. McLaughlin, president of DMG, in a phone interview. "It has all the elements of a complete urban destination resort. We're right in the heart of Condado, on the beach, and yet we have available to us all the advantages of San Juan and the Old City."
McLaughlin, former president of Palmas del Mar -- a well-known resort on the island's southeastern coast -- says the new project "will reflect Puerto Rico's Spanish heritage and will dramatically enhance the character and style of the area," serving as a catalyst for the redevelopment of Condado, which has deteriorated over the years.
Other members of the Atlantic Gulf consortium include Inter-Continental Hotels; architectural firm Wimberly Allison Tong & Goo, which has designed Four Seasons and Ritz-Carlton hotels, and SWA Group Land Planners, which specializes in parks, plazas and gardens.
McLaughlin, who expects the Condado Beach Resort to open in the fall of 2000, says the partnership's investment stems at least in part from Puerto Rico's 1993 Tourism Development Incentives Act, which offers tax breaks and attractive financing packages to companies that invest in hotel projects. He said the project will create around 2,000 permanent jobs.
"With the exception of the historic original Vanderbilt building, the plan provides for the demolition of the existing structures, and for the project to be developed in individual buildings of varying heights," according to an Atlantic Gulf handout. "This design approach will break us the mass of the project, significantly reduce its physical impact, and provide a number of opportunities for opening vistas from Ashford Avenue to the Atlantic Ocean."
Marcos Rodriguez-Ema, president of the Puerto Rico Government Development Bank, selected Atlantic Gulf's proposal from a list of six offers that included a $15 million bid from the municipality of San Juan, which would have converted the Condado Beach into a Swissotel and La Concha into a Sheraton Four Points property.
Few people will regret the demolition of 79,000-square-foot El Centro, built in the 1960s and for years the island's only convention center of any size. Like the two government-owned hotels, obsolesence and lack of interest forced El Centro shut earlier this summer.
"That property was misnamed from Day One," says Jaime L. Gonzalez, vice-president of the Puerto Rico Tourism Co. "It was never a convention center, just one big meeting room."
In its place, the government proposes to build Latin America's largest convention complex on a spit of unused land along San Juan's Isla Grande waterfront.
The center, expected to cost $100 million, will be financed through a combination of casino earnings and an increase in the hotel room tax. It'll sit on a site measuring 30 to 40 acres, and will be part of a $1.2 billion waterfront project known in Spanish as El Triangulo Dorado (The Golden Triangle).
Announcement of the 400-room Inter-Continental where La Concha currently stands signals a return to Puerto Rico by the New York-based hotel chain. For 15 years, the company operated the 170-room Ponce Inter-Continental along the island's south coast, but closed that property in 1976 after financial difficulties.