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New Hotel Says It Can Prosper in Hard Times : Lodging: Loews Hotels is optimistic that its new Coronado resort will buck the trend in the industry.

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TIMES STAFF WRITER

Loews Hotels President Jonathan M. Tisch readily acknowledges the irony of staging the grand opening of a 440-room luxury hotel at the very moment the industry in San Diego County faces its biggest room glut in recent memory.

“The industry is in terrible shape,” Tisch said during an interview at the Loews Coronado Bay Resort, which held its grand opening Saturday. “There is an obvious oversupply of rooms.”

Still, he said, despite the glut and a nationwide economic slowdown that has affected business and personal travel, the waterfront Loews Coronado is well-positioned to escape the sea of red ink that is forcing hundreds of new hotels nationwide into foreclosure.

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That decidedly optimistic assessment is driven by the fact that the Loews Coronado is dramatically different from most competing properties in San Diego County, where occupancy rates are hovering at about 63% and the average room rate is down slightly from a year ago.

To start, the $90-million hotel sits on a pie-shaped, 15-acre, man-made peninsula that juts into San Diego Bay. That layout affords dramatic views of the bay or downtown San Diego from nearly every guest room and the hotel’s impressive meeting rooms.

Equally important, the hotel was built on a financing package that, when completed two years ago, “took into account the difficult credit market” that is now hurting other new hotels, Tisch said.

“We didn’t do a pro forma that says we’ll have 85% occupancy and be charging $300 a night,” he said. “That just isn’t going to happen. . . . We used numbers that make sense.”

Loews’ conservative approach is the result of being in the hotel business for 45 years, Tisch said, adding, “We’ve gone through the booms, busts and recessions.”

The New York-based company’s conservative bent is apparent in recent expansions outside of San Diego.

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Loews recently bought--at a substantial discount--three debt-plagued properties in Denver, Nashville, Tenn., and Annapolis, Md.

While Loews owns four flagship hotels in New York City, the company is hesitant to enter some other large markets because the right deals have yet to materialize, Tisch said.

“We don’t intend to let development deals burn a hole in our pocket,” he said.

Tisch said he believes the right deal will eventually surface in many of those larger cities because the poor economy will force as many as 1,000 hotels nationwide into foreclosure during the next few years.

Loews is also willing to develop new properties, either as owner or manager, he said.

The company has a management contract at the Coronado hotel, which is owned by Coronado residents Josef and Lenore Citron, and MKK Associates, a company that includes four Japanese investors. Loews and a development company also plan to build a 300-room golf resort on Half Moon Bay, south of San Francisco.

The Half Moon Bay and Coronado hotels are both designed to cater largely to business meetings. In Coronado, business travelers will account for more than 60% of business, Tisch said.

“One of the strengths of Loews Coronado is its meeting space,” said Scott Smith, a San Diego-based hotel industry analyst with Pannell Kerr Forster.

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“It has some of the best meeting space in the county, as far as how large it is and how it’s laid out. . . . That meeting space will be a critical factor in whether or not it’s successful,” Smith said.

Despite that asset, the hotel has its marketing work cut out for it in a depressed economy that has resorts around the country competing against each other for decidedly cost-conscious meeting managers.

While the Coronado resort will compete with the nearby Hotel del Coronado, the waterfront Marriott and the Meridien on Coronado, it will also compete with the growing number of downtown hotels near the San Diego Convention Center. And, during January and February, the peak meeting months, they’ll also be competing, to a lesser extent, with the desert properties in Palm Desert and Palm Springs, Smith said.

To lure business meetings from around the country, Loews will use the time-honored approach of discounting its rooms and attempting to make up the difference on beverage and food sales.

The company also plans to attract business by including the Coronado resort in packages that will feature it along with other meetings-oriented Loews hotels around the country.

Hotel executives maintain that the new property has already captured the fancy of hard-to-impress meeting managers. Prior to its grand opening Saturday, the hotel had booked about 40,000 room nights for guests who will attend meetings at the resort during the coming year.

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Tisch acknowledged that it will be difficult for Loews--or its competitors--to cut costs and still lure business travelers. At the Coronado property, some executives are being asked to handle double duty, while employees are being asked to work harder.

Room rates begin at $180 a night for a single. The hotel, which also offers executive suites and hospitality suites, has three presidential suites, which range up to $1,250 per night.

Loews, a subsidiary of Loews Corp., a $12-billion holding company that includes Lorillard , a cigarette manufacturer; the CNA insurance company, and an interest in the Bulova watch company. Loews also owns or operates 15 hotels in the United States, as well as a hotel in Monaco.

Tisch, 38, is the nephew of the company’s chairman, Lawrence Tisch, who is also chief executive of CBS.

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