Hyatt to Provide Luxury Housing for Retirees : Hotel Chain Believes Its Expertise Will Give It Edge in Running Residences

Hyatt Corp., the hotel chain renowned for stunning glass atrium lobbies, swank service and pricey rooms, is planning to try its hand at luxury group-housing for retirees.

Penny Pritzker, member of the billionaire family that controls Hyatt, said the Classic Residence subsidiary she heads is part of a broader trend by big business to get into the fragmented but potentially lucrative market of residences for retirees.

Classic Residence “was a family-generated idea,” she said. “I was very much involved in it, but we do things as a family.”

Those things include 95 U.S. hotels and 50 abroad, a Chicago law firm, casinos, farmland and about 60 industrial concerns. The Pritzkers are also known for dabbling in takeover situations, most recently the MCorp banks of Texas and Eastern Airlines.

Study of Housing

Hyatt researchers found that the top 10 providers of group housing for senior citizens had less than 10 facilities each, Penny Pritzker said in a telephone interview from Chicago, where the family’s operations are based.

“It’s been basically a developer-driven business,” she said, “and in our view it’s a service business and that’s something we know very well.”

She predicted there eventually will be “brand consolidation, and we’ll be able to capitalize.”

“Our expertise in food and beverage and maid and linen service, and our general knowledge of consumer services, will give us an edge in the business.”

Hyatt is developing Classic Residences in Dallas, Reno and Teaneck, N.J., scheduled to open within weeks of each other this summer. Others are under construction in Riverdale, N.Y., and Chevy Chase, Md.

“Our hope is to do four or five projects a year,” Pritzker said.

The Dallas version includes an atrium, a trademark of Hyatt hotels, but that is just coincidence since the building was purchased by the company from another developer who originally intended it to be a condominium, said Gary Anderson, the director of the 147-room project.

Cost Not Cheap

It won’t be cheap to live in one of the Hyatt homes--rents in the Dallas Classic Residence range from $1,800 to $2,600 per month. But Anderson said the cost is comparable to expenses for maintaining a house, buying groceries and paying for transportation.

There will be maids, linen service, 24-hour security, planned activities, a library, 25 meals a month and a concierge to handle requests.

“Hyatt got into the business because we think . . . our ability to provide quality service, as well as our brand recognition, is something that is familiar to seniors,” Pritzker said.

Potential residents are “individuals who have generally set aside some money for retirement,” Anderson said. “We’re looking for the retired school teacher, the guy who retired from GM . . . fairly everyday people.”

The idea is that retirees who have recently sold a house will have a large amount of cash that they can add to pensions and Social Security to afford the rent easily.

“The only concern we have . . . is the real estate market,” Anderson said. Houses in Dallas frequently sit unsold for months at a time, a consequence of the state’s depressed economy.

“It’s just a fact of doing business in Texas right now,” Anderson said.

He predicted Hyatt’s Classic Residences will appeal to people who have sufficient resources to rent out their homes and live in luxury facilities.

Included in the rent is long-term care insurance, which will pay residents $40 a day toward nursing-home care should they need it eventually. Anderson said the insurance, combined with what residents already were paying in rent, should cover nursing homes charges.

Hyatt was able to buy the Dallas building, which is within a block of a nursing home and two blocks of a major Dallas hospital, for less than it could build a in a similar location, he said.

Hyatt has reached agreement with the nursing home to provide assistance to any residents who might need it. In other planned locations, a section of the residence will be set aside for people who need “assisted living.”

The Teaneck project already is 25% to 30% leased, and “we’re very pleased with that,” Pritzker said.