Developer Puts Money Into a Bed of Luxury

If you check into a costly luxury hotel in one of the nation’s big cities, there’s a good chance you’re putting money into the pocket of Los Angeles real estate investor and developer Lewis Wolff.

In a relatively short period of time, Wolff, chairman and co-founder of the privately held Maritz, Wolff & Co., and his partners have gained financial interests in such prominent properties as the San Francisco Fairmont, the Four Seasons in Houston and Boston’s Copley Plaza. Earlier this month, Maritz, Wolff agreed to buy New York’s legendary Carlyle Hotel--a favorite among American and European bluebloods--for $130 million.

“He’s cherry-picked good, high-quality four- and five-star properties,” said Michael Branigan, senior vice president at Wise Hotel Investments. “The high end is where the better [results] of the industry have been.”

Signs of a slowing economy--which proved deadly to many hoteliers in the early 1990s--have not scared off Wolff, a 40-year real estate veteran. Wolff said the group’s portfolio of owned and managed properties is well-prepared to weather economic turbulence with relatively little debt and long-term backers. The hotels’ locations in big urban centers, where it is difficult to build new hotels, has kept competitors at bay and will help limit rate cutting.

“I don’t think our pace will slacken because of the economy,” said Wolff, whose group owns all or part of about 20 hotels and has a stake in the Rosewood and Fairmont hotel management companies. The firm purchased the historic Miramar Hotel in Santa Monica in 1999.

Wolff began his foray into the world of luxury hotels during the last economic recession when he stayed at a new Ritz-Carlton in St. Louis for a bargain rate of $85 a night.

Wolff figured that many of the middle managers who were able to move up and stay amid such luxury would not want to go back to a standard hotel when times got better. So, after the St. Louis hotel fell into financial problems in 1994, Wolff and his friend and St. Louis business partner, Philip “Flip” Maritz, scooped up the hotel for half of its construction cost.

“The good thing about the top-tier hotels,” Wolff said, “is that even at times when you overpay, when the market comes back you are in better shape than somebody who stole a Ramada Inn.”

Wolff and Maritz run a lean organization, preferring to give individual hotel managers broad authority over their properties. Being organized as a private company has allowed Maritz, Wolff greater flexibility in purchasing and operating hotels than a larger, publicly traded company would be likely to have. So, for example, should a seller ask if his brother and part owner can stay as hotel manager for a few years, Wolff, Maritz would be willing to listen.

“It’s harder to do that when you’re a corporation with a lot of rules and regulations,” Wolff said.

Maritz, Wolff’s private structure and deep pockets have made it a quick and nimble player, said Alan X. Reay, president of Atlas Hospitality Group, a Costa Mesa hotel broker. They can move fast to take advantage of a deal and can wait for a property to generate the needed financial results.

“As a private company you can look more long-term,” Reay said. “They definitely benefit from not having the constraints of Wall Street.”