Hotel Management recently spoke to Euro Capital Partners, which in 2010 acquired The Watergate Hotel with the intent to return it to its past glory. The hotel, best known for a political scandal that rocked the nation and led to the resignation of President Richard Nixon, was injected with a huge sum of capital and later this year will reopen as one of Washington, D.C.'s preeminent luxury hotels. Below is a truncated version of the story; the full article can be found in the January issue of Hotel Management.
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 President Richard Nixon’s administration.
And just like Nixon’s reputation withering into disrepair, so too did The Watergate Hotel. 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 capitol, predicted Jacques Cohen, principal, 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 ownership, which had no real vision for the property or money to spend on it. The latest plan was to run 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.
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, before 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.
MORE FROM EURO CAPITAL
Don’t expect The Watergate to be the last you hear of Euro Capital. According to Jacques Cohen, the international real estate developer and hospitality management company will be developing more luxury hotels in gateway cities for years to come. “The 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.”