National Report – There are hotels—and then there are hotels; the ones that are made famous—or infamous—by an intersection of memorable and historical events. That is The Watergate Hotel, on the banks of the Potomac River in Washington, D.C., forever linked to political malfeasance lore once a June 1972 break-in was discovered at the Democratic National Committee headquarters there, and the subsequent attempt to cover it up by President Richard Nixon’s administration.
And just like Nixon’s reputation withering into disrepair, so too did The Watergate. But just like some politicians put to shame, it is getting a second chance.
That’s after it was acquired in 2010 for a reported $45 million by New York-based real estate developer Euro Capital Properties, which, subsequent to the transaction, pumped in $125 million toward a complete renovation project that will see the hotel reopen in the third quarter of this year as one of the top five hotels in the nation’s capital, predicted Jacques Cohen, principal of Euro Capital Properties, owner and operator of the hotel.
How Euro Capital became owner of the hotel is not unlike many cases of underwater assets being bought at discount during the recession. In this case, Euro Capital acquired the property from the lender, PB Capital, a subsidiary of Deutsche Bank AG, which had foreclosed on the previous owner.
According to Cohen, the hotel had been in upheaval even years before that. “It had been a debacle for the last 15 years before it eventually closed,” Cohen said. (The hotel had been shuttered since 2007.) “The hotel was like a dead ship,” Cohen said, adding that it was full of mold and even asbestos.
That’s after it had gone through countless ownerships, which had no real vision or money to spend. The latest plan was to turn the hotel into a complete condo building, but that faced terrible opposition from the neighborhood and eventually petered out. The previous owner eventually lost its investors and went bankrupt.
"It was a very attractive deal because we saw so much potential and we were very optimitistic of what we could do with it. It's a complete transformation."
Jacques Cohen, principal, Euro Capital Properties
Euro Capital, for its part, monitored the situation from the sidelines; then got into the game and made a deal with PB Capital.
“It was a very attractive deal because we saw so much potential and we were very optimistic of what we could do with it,” Cohen said. “It’s a complete transformation.”
For one, the hotel’s room count is being taken up to 343 rooms from around 220 prior. A stylish rooftop bar is being added and all of the meeting space, earlier unusable due to obstacles such as low ceilings, is being revamped. The hotel will now have 17,000 square feet of meeting and function space, and a 7,000-square-foot grand ballroom.
Other components will remain the same; after all, this is a hotel on the National Register of Historic Places. Rakel Cohen, director of design and development for Euro Capital, said the pool will go untouched, but the grand staircase is being restored. The hotel’s iconic curbed exterior will also be unaffected.
“We fell in love with the property,” Rakel Cohen said, referring to the original 1961 architecture by Italian architect Luigi Moretti. “He designed it like a boat on the river,” Cohen said. “The whole building is very curved and we are restoring it like it used to be.”
Euro Capital brought in famed London-based Israeli designer Ron Arad, whose work includes the Hotel Duomo in Italy and the Design Museum Holon in Israel, to lead design. Washington, D.C.-based BBGM is the architect of record.
Now, 95 percent of rooms will offer river views and about half will have balconies.
"The Watergate changed history on its own. This development is going to change hospitality in D.C."
Jacques Cohen, principal, Euro capital Properties
“Our vision was to recreate the site through a really big capital expenditure,” Jacques Cohen said. “We are going to be at the really high end of the market. A top five hotel in D.C.”
He’ll have competition. The 270-room Trump International Hotel, Washington, D.C., is set to open in 2016 after its own sweeping renovation of the Old Post Office Pavilion on Pennsylvania Avenue. Other competitors will include the Mandarin Oriental, two Ritz-Carltons, a Four Seasons, a St. Regis, a Park Hyatt, not to mention an assortment of high-end independents, including the Hay-Adams and The Jefferson.
But Cohen appears up to the task. “The Watergate changed history on its own,” he said. “This development is going to change hospitality in D.C.”
More from Euro Capital
Don’t expect this to be the last you hear of Euro Capital. According to Jacques Cohen, the real estate developer and hospitality management company will be developing more luxury hotels in gateway cities in years to come.
“This hotel is our flagship for a new luxury brand,” he said. “We are going to build a lot of hotels in gateway markets, in the same idea as The Watergate.” Cohen wouldn’t comment further on specifics or a name for the brand—though The Watergate appears to be in play.”
Cost to renoate The Watergate Hotel.
Source: Euro Capital Properties
In a press release, Cohen referred to The Watergate as “the first property of the Watergate Hotels & Resorts company.”
Cohen comes from a family of hoteliers. Euro Capital Properties, headquartered in New York, is a sister company to Paris-based The Gate Collection, which manages such properties as L’Hotel du Collectionneur and Les Jardins du Marais, which Cohen once ran.
“We are creating a top-notch hotel management company and are not interested in third-party management,” said Cohen. “Everything we do is our own.”