A Hotel Looks Back to Its 1920s Glamour
New York Times 10/25/2008
By FRED A. BERNSTEIN
JOE SITT received a degree in business at New York University in the 1980s, which helped him become a real estate powerhouse. But he also took courses in history, and that subject, he said, has had an influence on how he sees his work as a developer.
“One of my philosophies is that what ‘once was’ can be again,” he said.
In New York, where Mr. Sitt owns 11 waterfront acres of Coney Island, he is having a hard time proving the point. (His plans for hotels and condominiums have failed to win city approval, and the future of the area is in doubt.)
But in Chicago, Mr. Sitt has restored the Palmer House Hilton, a huge hotel he bought in 2005. The hotel had been a dowager for so long, according to Mr. Sitt, that Chicagoans were skeptical about his promises to bring it back to life. But the renovation has not only improved the hotel, it has also helped revive a once-downtrodden section of the Loop.
The president of a partnership called Thor Equities, Mr. Sitt, 44, threw himself into the hotel business after reading a newspaper article in 2004. The article said that companies like Hilton had decided to focus on managing hotels rather than owning them. Mr. Sitt asked one of his aides to call Hilton and ask if he could buy one of the company’s grandes dames, which at the time included the Palmer House. (Around the same time, Mr. Sitt said, he bid on the Plaza, in New York, which was ultimately bought by Elad Properties of Israel.)
Mr. Sitt paid about $240 million for the Palmer House, which has 1,639 rooms. After deducting the value of the hotel’s retail spaces, the price was about $89,000 per room, he said. By comparison, the Plaza sold for nearly $1 million a room.
He then embarked on a $170 million renovation that included upgrading about 1,000 of the hotel’s rooms.
He kept the hotel open the whole time, closing rooms slated for renovations in stages. At the same time, he began cutting costs (eliminating certain items from the room service menu, for example) and developing strategies to raise its profile, such as becoming the official hotel of SoxFest, the annual Chicago White Sox fan convention.
The renovation, among other things, added an underground parking garage. Mr. Sitt also removed a series of fire escapes that had marred the hotel’s State Street facade for decades. Taking them down — which was possible because the renovation added new fire stairs inside the building — was “like taking the braces off a kid — it starts to shine and glow,” he said.
It was the State Street frontage that first drew Mr. Sitt’s attention to the Palmer House. In the early 1990s, he was primarily a retailer, having created the Ashley Stewart chain, which sells plus-size women’s clothing.
When he decided to bring Ashley Stewart to Chicago, Mr. Sitt found himself looking at vacant storefronts in the Palmer House. Mr. Sitt rented space for the store, and found himself drawn to State Street, which was described as “that great street” in the song “Chicago,” made popular by Frank Sinatra.
“When you open a store in a neighborhood you get to know the community,” Mr. Sitt said. “I got close to the people on State Street, and I fell in love with it.”
In the late 1990s, Mr. Sitt, who was born into the Sephardic community of Gravesend, Brooklyn, began morphing from retailer to real estate developer. Eventually he bought several commercial properties on State Street, near the hotel, which he upgraded and rented out to other retailers. A few years ago, the area was buttressed when Millennium Park (containing a Frank Gehry band shell and other attractions) opened just a couple of blocks away.
The Palmer House, though, was an attraction in itself. Indeed, Mr. Sitt noticed that Chicago tourist maps recommended seeing the hotel’s lobby, particularly the scenes on its ceiling from Greek mythology, painted by the French muralist Louis Pierre Rigal in the 1920s But the hotel, Mr. Sitt said, didn’t benefit when people came simply to look. So he “activated” the lobby, he said, by installing a new bar and restaurant.
Not everyone approves of the newly appointed lobby. One independent architecture writer, Lynn Becker, described its furniture arrangement as “cluttered, claustrophobic and graceless.” But on his blog, Mr. Becker had high praise for Thor’s work on the exterior. “The good news,” he wrote, “is that the State Street facade has been restored to its original grandeur.”
But the exterior took some negotiation. Mr. Sitt’s initial proposal called for modernizing the original storefronts, with sleek metal frames and large expanses of glass. When the Commission on Chicago Landmarks approved the new design, local preservation groups protested. (One of the groups, Preservation Chicago, described Thor’s plan as “a glass and metal assault upon the character of State Street.”) Eventually, a compromise was reached, with Thor largely maintaining the look of the 1920s building.
Mr. Sitt said the hotel (where standard rooms start at about $200 a night) has been profitable since the day he bought it. And he would like to use some of the money he is making in Chicago to redevelop Coney Island, where his proposal calls for, among other things, a large beachfront hotel.
But city opposition may prevent that from happening — especially if Mayor Michael R. Bloomberg succeeds in gaining a third term in office. (The mayor’s objection is that hotel rooms and condos, which are crucial to Mr. Sitt’s Coney Island plan, have no place in an amusement district.)
Sometimes, Mr. Sitt said wistfully, he wishes the Palmer House were in New York, so that the people there could see his work.