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Ivy Re-Brands as Hyatt’s Andaz Hotel

Historically, downtown San Diego hotels that don’t sit along the waterfront struggle in a recession. The Ivy Hotel — a chic property that made its debut in 2007 in the heart of the Gaslamp Quarter — is no exception.

So it came as no surprise to local veteran hotelier Bob Rauch when he heard about the Ivy turning into one of Hyatt Hotels Corp.’s newest brands, Andaz, a collection of über cosmopolitanlike boutique hotels.

“You have to have everything work to make it through a recession — a strong brand, strong location and strong management,” said Rauch, president of San Diego-based hotel management firm R.A. Rauch and Associates Inc. and general manager and partner for the Hilton Garden Inn San Diego Del Mar and Homewood Suites by Hilton San Diego-Del Mar in North County. “I don’t think the Ivy suffers from a lack of management or its local brand. But the location is not an A-plus. So it’s a smart move for the Ivy to partner with Hyatt. It’s a way for an independent hotel to survive the tough times by reaching out to a global brand like Hyatt that provides significant market reach much like Hilton and Marriott do. It levels the playing field a little bit for an independent like Ivy.”

Under the management agreement between an affiliate of Kelly Capital, the Ivy Hotel’s owner, and Hyatt Corp., a subsidiary of Hyatt Hotels Corp., the 159-room Ivy Hotel will transform into the Andaz San Diego beginning Feb. 1, according to Hyatt’s announcement Jan. 11.

While the Ivy, which is located at Sixth Avenue and F Street and features a restaurant, bar and nightclub, opened in 2007 with much fanfare, many of the bells and whistles have stopped going off.

Going After Worldwide Audience

“It’s no secret that the hotel industry has been affected by the decline in our economy and especially the luxury hotel market,” said Jessica Cline, director of marketing for Kelly Capital. “At the end of the day we chose Hyatt and Andaz because they have global brands that will enhance and improve the Ivy experience.

“The global resources of Hyatt will allow us to market the property to a larger worldwide active audience, which is difficult for a stand-alone property,” Cline added. “The goal is to bring revenue to the hotel, its nightclub venues and ultimately to the Gaslamp Quarter.”

She said the Andaz San Diego will continue to cater to locals. That’s why the Ivy Ultra Lounge and Wine Bar, Ivy Nightclub and rooftop bar will keep their names, and no significant changes will be made to the venues.

“There is brand equity in the Ivy name,” Cline said. “We have worked hard to keep it a sophisticated venue for adults; we have been very cautious about maintaining the work we have done on the Ivy brand. We’re extremely excited to be working with the Andaz to further the potential of what we started. The Andaz brand is really about immersing itself into the community, which reflects what the Ivy has done in the past. We have a similar personality and dedication to the local community.”

The first Andaz opened in London in 2007. Other Andaz hotels are located in West Hollywood and New York. Hyatt Hotels plans to open a second Andaz in New York and one in Austin, Texas.

Increasing Revenues

Aside from its goal to keep the locals coming in, catering to the international scene will bring in more dollars to the hotel and its entertainment venues, Rauch said.

“They have built a strong local brand; and their food and beverage program has captured the hearts of the locals,” he said. “What they likely realized they need to do is capture the hearts of more of the traveling public. Hyatt has a significant awards program like the major brands, something that the Ivy did not have. I think that’s what was missing. The Ivy doesn’t have any significant market reach outside San Diego.”

Jimmy Parker, executive director of the Gaslamp Quarter Association, a nonprofit trade organization, said the Andaz San Diego will enhance an already internationally focused branding campaign for the Gaslamp Quarter.

“We have worked to make the Gaslamp a destination for international travelers and conventioneers, but also for people who live and enjoy the San Diego County region,” said Parker. “The Ivy did amazing things when it launched. I don’t think anyone would doubt their strategies or methods or the quality of the venue. I think they excelled in almost every area. A lot of their internal structures are intact. Hyatt does not usually come in and resuscitate a property; they add to it. That’s what Kelly Capital did when they bought the Maryland Hotel (now the Ivy). They gutted it, completely redid it, and turned it into the Ivy.

“It’s the market that went bad, not the hotel,” Parker said about the Ivy, which reportedly received a $75 million makeover as part of the transformation from the Maryland Hotel.

Parker pointed to The Westin Gaslamp Quarter, San Diego, which also went through a rebranding campaign a few years ago.

“They tested it in Europe and other places and decided that the Westin Gaslamp had more of an international draw than the Westin Horton Plaza,” he said, explaining the name change of the Westin in downtown San Diego. “People are pretty brand savvy. As locals, we know Horton Plaza, but it’s not such a compelling story to international travelers. They don’t know Horton Plaza, but they do know the Gaslamp Quarter, which has more of an international draw. … You have to have a bigger pool to support a high end property like the Ivy.”

Andrea Siedsma is a freelance writer for the Business Journal.

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