Loews Hotels Pursues $435 Million Expansion in Texas and Florida
Skift Take
Key Points
- Loews Hotels is investing $435 million in four new hotels in Texas and Florida.
- The expansion includes the new Loews Arlington hotel and three hotels in partnership with Universal Studios in Orlando.
- Loews Hotels reported $147 million in net income on $852 million in revenue last year, with a 28% increase in debt year-over-year.
Summary
Loews Hotels is investing $435 million to expand its presence in Texas and Florida, constructing four new hotels. The investments include the soon-to-open Loews Arlington in Texas and three hotels in partnership with Universal Studios in Orlando. This expansion reflects Loews' strategic focus on these key states, with the company generating significant revenue and maintaining a healthy profit margin despite an increase in debt.
Loews Corp., the parent of the Loews Hotels chain, detailed on Monday the extent of its financial commitment to expanding in two key states — Texas and Florida — where it's building four hotels.
Loews Hotels said it had made an equity investment of nearly $435 million in these four soon-to-open hotels, and put together nearly $600 million in debt and partner equity.
On February 13, Loews Hotels will open the 888-room Loews Arlington in Texas. It owns 95% of the property. It's a new construction project and next to a convention center, across from the new stadium home of the Texas Rangers, and also by the home of the Dallas Cowboys. The hotel marks the brand's second property in Texas, after the Live by Loews that debuted in Arlington in 2019.
In Florida, Loews is making an even bigger expansion. It is the half-owner, with Universal Studios, of three hotels that are set to open next year at the Universal Orlando theme parks. One of the hotels will be inside Universal Orlando's upcoming $1 billion Epic Universe Theme Park.
The expansion in Orlando represents a consolidation of Loews' long-term bet on Florida. Before the expansion, it had 61% of its systemwide hotel rooms in Florida alone. Adding the three hotels with 2,000 rooms will bring that to about 66%.
Rooms and events at its Loews Arlington property have already generated bookings "into 2030," the company said.
"We typically evaluate the attractiveness of new hotel projects using a cash-on-cash return metric," said
James Tisch, president & CEO of Loews, to investors on Monday. "We compare the all-in stabilized cash flow projections to the amount of equity required and we generally target mid-to-high teens returns based on that metric."
Loews generates enough cash that it has needed minimal debt to finance its equity investment in the projects. Its hotel division generated $147 million in net income last year on $852 million in revenue — roughly representing a 17% profit margin.
That said, the total debt of Loews Hotels as of December 31 was $927 million, a rise of 28% year-over-year.
Photo Caption: A rendering of the exterior of the Loews Arlington, Texas, hotel that will open February 2024. Source: JE Dunn Construction.
Up Next
How Travel Brands Can Seize the ‘Q5’ Opportunity on TikTok
Hilton to Hit 1,000-Hotel Milestone in Europe and the Middle East
Iceland’s Glaciers Are Shrinking: What's the Risk to Tourism?
Virgin Atlantic Warns of Slowing U.S. Demand
