The heated indoor swimming pool at The St . Regis Chicago .
He specifically cited The Langham , Chicago , Four Seasons Hotel Chicago and The Peninsula Chicago as the hotel ’ s competitive set . ( Other luxury hotels in the city include Waldorf Astoria Chicago , The Ritz-Carlton , Chicago and Park Hyatt Chicago .)
“ This was part of the attraction ,” Alibhai said . “ Of course , it is not for the faint of heart because the beta of these projects can be very volatile . You have to be able to get through capital cycles because it takes a lot longer to get these developments underway . You could easily have started in a boom period and end up in a recession period .”
FAST TO THE FINISH There is a long timeline when it comes to building a hotel from scratch as opposed to buying one . In the case of Gencom , the hotel was already erected , obviating some of the risk .
As Alibhai recounted it , the deal came about , like many do , through knowing the right people . This was 2020 , and as he explained it , Gencom ’ s people knew Magellan ’ s people , Wanda Group ( a Chinese conglomerate that in recent years plowed massive amounts of capital in U . S . businesses , from AMC Theatres to real estate ) pulled out and there was space for a partner . This was in the throes of the pandemic ; a pall of fear existed .
Magellan partnered with JP Morgan and Goldman Sachs on the project ; subsequently , Gencom came in with its partner , GD Holdings . “ It created a transaction structure that allowed Magellan to take Wanda out and then with our relationship that we enjoy with the Marriott luxury group , we were able to get them to support us ,” Alibhai said . ( Marriott International operates the hotel .)
A large component of the project is residential sales , which typically complement a luxury hotel build . There is some 1 million square feet of residential space within the development and Magellan has spearheaded the sale of it .
“ Having the alignment between hotel owner and residential was important to Magellan and it was very good for us ,” Alibhai said . “ We were able to enter the acquisition at a very attractive basis , which gives us very good long-term holding power while the city recovers .”
Chicago-based Lettuce Entertain You is responsible for operating the food and beverage at The St . Regis Chicago , including Japanese restaurant Miru and Tuscan steakhouse Tre Dita .
Alibhai is a staunch believer in luxury hotel investment ; it ’ s gotten him this far . His lodestar , curiously , is not a hotel brand ; rather , it ’ s a retailer , LVMH , which he said has done an impeccable job harnessing and growing a massive stable of luxury brands .
“ They are the best teacher in the world ,” he said . Alibhai is a good pupil .
THE BETA OF THESE PROJECTS CAN BE VERY VOLATILE . YOU HAVE TO BE ABLE TO GET THROUGH CAPITAL CYCLES BECAUSE IT TAKES A LOT LONGER TO GET THESE DEVELOPMENTS UNDERWAY . YOU COULD EASILY HAVE STARTED IN A BOOM PERIOD AND END UP IN A RECESSION PERIOD
– KARIM ALIBHAI , FOUNDER AND PRINCIPAL , GENCOM
Jul / Aug 2023 hotelsmag . com 31