Once the darling of Miami Beach, Delano has ‘lost its edge.’ A new owner plans changes
When Studio 54 impresario Ian Schrager reopened the Delano Hotel in 1995, the refashioned Art Deco gem was immediately dubbed the epitome of cool, revitalizing Miami Beach and launching a tsunami of “boutique” hotels that forever changed how Americans vacation.
But the one-time nexus of hip has been shuttered since March amid the COVID-19 pandemic. Now, it has a new owner.
Connecticut-based holding company Eldridge purchased the 191-room Collins Ave. hotel for an undisclosed amount from hospitality giant SBE last month. The hotel will remain closed until anticipated renovations are finished, Eldridge said in a statement.
When it opened in 1995, The Delano’s avant garde style — designed by Philippe Starck — drew raves for its ever-overflowing pool with a silver table and chairs in the shallow end, lobby pool table and eat-in kitchen. Celebrities including Madonna, Jamie Foxx and Jay-Z used it for their A-list parties, while Leonardo DiCaprio, Calvin Klein, and Lenny Kravitz sequestered in its stark white hotel rooms punctuated by a bright green apple on a doorside stand.
The hotel, built in 1947, is located at 1685 Collins Ave. inside the Art Deco historic district.
SBE purchased the Delano in 2016 when it acquired 13 Morgans Hotel Group properties for $794 million. Last month SBE also sold to Eldridge the 878-room Hudson Hotel in Midtown Manhattan.
Cain International, Eldridge’s real estate investment division, will lead the reopening of the Delano. Cain CEO Jonathan Goldstein said before that happens there will be a “wholesale revamp” that will take at least a year.
“It is the beacon in my view on the Miami Beach front line,” he said. “It’s got a globally known brand, it’s centered right in the heart of so much activity that will assure its longevity and attractiveness.
“The previous incarnation of the hotel is well over 15 years old. It set the standards for the time,” he said. “It somewhat lost that edge...Now how should we take it on to the next level, reflect Miami in 2021 and 2022 and bring it back to its former glory?”
For the food and beverage spaces, Goldstein said he’s looking for brands that will attract visitors so the Delano can compete with its newer neighbors, 1 Hotel South Beach and The Miami Beach EDITION.
The COVID-19 pandemic has hobbled Miami’s tourism industry. During a successful February hosting the Super Bowl, Miami-Dade hotels reached an average occupancy rate of 86.1%, according to hospitality data firm STR. In October, the most recent month for which data is available, county hotel occupancy was just 41.6%.
The Delano laid off nearly 200 workers in June as Miami Beach hotels were allowed to welcome visitors again. Morgans Hotel Group Management, which continued to operate The Delano under SBE, received a federal Paycheck Protection Program loan — part of a federal COVID-19 stimulus package — worth between $2 million and $5 million to support 97 jobs, government data show. Goldstein said he is reviewing which management company will take over the hotel.
More hotel sales to private equity firms are expected as owners grapple with the economic fallout of the pandemic. Nationwide hotel transactions are down significantly this year, but private equity sales represent 44% of transactions, compared to 20-40% in previous years, according to JLL, a real estate services company.
Goldstein thinks Miami’s brand will endure the 2020 downturn.
“If you are long-term believers in gateway cities as we are, then you have to take advantage of opportunities when they present themselves,” he said. “We’re excited about what that could mean from the Delano.”
