Soon, two out of every three rooms in the Loews Hotels chain will be in either Texas of Florida.
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 adjacent to a convention center has 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.