Leaving the Commune

After an abrupt split, Jason Pomeranc prepares to re-grow his boutique hotel business

Oct.October 01, 2013 07:00 AM
Jason Pomeranc

Jason Pomeranc

In 2011, Jason Pomeranc had everything a young hotelier could want. After turning his family’s real estate company, the Pomeranc Group, into one of the hottest hospitality brands in the country, the suave world traveler had a bevy of celebrity friends.

He also had a newly formed partnership deal with Hyatt heir John Pritzker, which gave him what he’d long coveted: access to hundreds of millions of dollars in capital and a pathway to global expansion, which would hopefully grow his Thompson Hotels brand into a powerhouse that could compete with industry icons like Ian Schrager. The new, joint company would be called Commune Hotels & Resorts.

But in August, without much warning, the partnership fell apart. Pomeranc agreed to sell off his family’s stake in Commune, along with all but five of their hotels. He also agreed to give up his Thompson and Tommie brand names.

Now Pomeranc, 42, is reassembling his original team to launch a new hotel brand, in a bid to regain the magic he once had.

In an interview last month in the lobby of one of his remaining hotels, his flagship 60 Thompson, Pomeranc told The Real Deal that he expects to announce the name of his new brand this month. He said he may tap new capital partners and expand to 12 cities worldwide, and spend millions adding new touches to existing properties.

“We’re going back to our core, tightly held principles,” he said.

Pomeranc was reluctant to divulge the details of his split with Pritzker. But he did note that the fast-growing lifestyle-hospitality sector is undergoing a tumultuous period. Also in August, the Chetrit Group and King & Grove dissolved their partnership. And last month, hotelier André Balazs sold a stake in his hotel brand, the Standard, and put his Meatpacking District hotel of the same name on the auction block.

“There’s a lot of intensity in the lifestyle hotel market,” Pomeranc said. “One [reason] is because it’s a growing market. If you look at the percentage of lifestyle or boutique hotels in relation to the rest of the industry, it’s still a tiny segment. Therefore you have a convergence of capital and strong personalities. When you put that group of volatile personalities together, if it all works out, greatness happens. But if not, there’s conflict.”

Pomeranc’s supporters are confident that he’ll emerge from the split with Pritzker even stronger than before. His friend and advisor Jeffrey Davis, a managing director at Jones Lang LaSalle, called Pomeranc a “visionary” who knows how to establish a truly forward-thinking brand.

“You can take any hotel building and put [in] interesting interior design and slap some paint on it and call it a lifestyle hotel,” said Davis. “Most of these fall short. A lifestyle hotel needs a visionary and impresario.”

The reinvention act

Pomeranc said his new venture will develop ground-up hotels in New York and other major cities. He noted that it may also renovate and rebrand the boutique hotels the Pomeranc Group still controls: 60 Thompson, Thompson LES and 6 Columbus in New York, and the Thompson Beverly Hills in California. (As part of the agreement with Pritzker, Thompson LES and Thompson Beverly Hills will change their names, Bloomberg News reported.)

It was initially reported that Pomeranc would also retain control of Miami Beach’s art deco Hotel Victor, where Commune announced a management deal in 2012. But Pomeranc told TRD last month that he is no longer involved in the hotel, where owner Nakash Holdings recently completed a major renovation and changed the name to Thompson Ocean Drive. Nakash said last month it is considering combining the hotel with the adjacent Versace Mansion.

“Due to the adding of the former Versace mansion to the project, we have mutually decided with the Nakash family not to participate in the project,” Pomeranc said through a spokesperson.

But Pomeranc said he’s in the process of negotiating two New York hotel deals, which he expects to close in the next few months.

He added that the company will expand through third-party management deals and may bring in new capital partners. To help him do all this, he’s recruited longtime colleague Stephen Brandman, the former co-owner and CEO of Thompson and CEO of Commune.

As for the new brand name, the blog Hotel Chatter reported that Civilian Hotels has been trademarked by an entity with an address next door to 60 Thompson. Pomeranc confirmed that his company trademarked the name, but denied that “Civilian” is the new brand name.

Still, he said the soon-to-be-announced brand will combine “comfort and luxury [with] a little bit of a rougher edge in some of the fixtures and architecture.”

Luckily, Pomeranc has experience building a brand from the ground up. His father, a Polish immigrant, launched the Pomeranc Group in the 1950s. The company developed affordable housing and airport hotels, including the Marriott Hotel at Newark International Airport and the Ramada Hotel at LaGuardia Airport. But in the late 1990s, Jason and his two older brothers, Michael and Larry, took the company in a different direction, eventually growing it into one of the more cutting-edge hospitality players.

Jason, a lawyer, joined the family business in 1997, after traveling extensively in Europe and following a stint at the real estate firm Rosenberg & Estis.

After joining the company, he spearheaded a move away from big-box airport hotels and towards boutique projects in Manhattan. He and his brothers brought in Brandman, tasking him with helping expand the company into independent hotel ownership and property management under partnerships with other developers.

Jason said he and his brothers stumbled onto the 60 Thompson site when they saw a “for sale” sign in front of a former garage. They proceeded to assemble a series of parcels in the mostly residential area, buying the air rights of six different properties.

“There were a lot of people that questioned the wisdom of building a pure hotel in a Downtown unproven location,” Pomeranc recalled. But the family hired interior designer Thomas O’Brien to convert the building into a 97-room hotel, which launched in 2001. A few years later, they added Kittichai, a high-end Thai restaurant led by chef Ian Kittichai of the famed Spice Market. Sources said a crucial factor in the success of boutique hotels is a trendy restaurant and bar scene. And within a few years, 60 Thompson had managed to become a go-to hideaway for New York’s celebrity set.

Meanwhile, the Pomeranc Group grew its new Thompson Hotels brand, as Jason cultivated a circle of friends in the entertainment and fashion worlds. In 2000, the company acquired the old West Park Hotel at 6 Columbus Circle. In a venture with Rosen Partners, the firm renovated the 88-room property, which reopened under the name 6 Columbus. The Pomerancs also partnered with LaSalle Hotel Properties to convert a former Holiday Inn at 15 Gold Street in the Financial District into the Gild Hall hotel.

But not every property was a runaway success.

Pomeranc partnered with Tribeca Associates on Smyth Hotel & Residences at 85 West Broadway, the first Thompson property with condo units.

The 15 condos were listed just before the real estate downturn, and were taken off the market only to return at discounted prices.

Meanwhile the hotel’s restaurant, Plein Sud, was panned by critics, and a legal dispute arose in 2012, when Tribeca Associates filed suit against the Pishyar family, the restaurant’s financial backers.

According to the suit, the Pishyars fired restaurateur Frederick Lesort and installed a member of the Pishyar family in his place. From then on the quality of service “declined severely, and management of the restaurant became increasingly chaotic,” said William Brodsky, managing member of Tribeca Associates, in an affidavit.

Brodsky and lawyers for the Pishyars declined to comment. The case was settled last month.

Plein Sud closed in August along with the hotel’s Toro Lounge bar, the website Tribeca Citizen reported. An eatery called the Restaurant at Smyth is now operating in the space.

In addition to these wrinkles, Thompson needed more capital to grow. That’s where Pritzker came in.

A new partner

Pritzker, son of the late Hyatt Hotels billionaire Jay Pritzker, left the family business in 1988 to strike out on his own.

Pritzker and his childhood friend Tom Gottlieb co-founded Mandara Spa, growing it into the world’s largest spa operator before selling it off in 2001. The two then launched the San Francisco-based Geolo Capital, which invested in entertainment and hospitality ventures, such as the Carmel Valley Ranch in California.

Looking to expand his hotel investment portfolio, he bought a majority stake in San Francisco-based Joie de Vivre, at the time the nation’s second-largest boutique hotel firm. His plan was to acquire between $300 and $500 million in hotel assets over five years, and grow Joie de Vivre from 33 hotels in California to about 60 nationwide. He tapped Pomeranc to help him expand to the East Coast.

“Pomeranc had 10 hotels and gave us the East Coast presence we were interested in, and [he] wanted to get into the California market,” Pritzker told TRD.

Pritzker and Pomeranc in 2011 announced a joint venture with 45 properties under the Joie de Vivre and Thompson names, and combined revenues of about $500 million.

The partnership was “organic,” recalled Pomeranc. “It was a good collaboration at the time.”

They installed Brandman as CEO and changed the name to Commune Hotels & Resorts.

Then they set out to quickly expand. In 2012, Commune announced management deals with the Hotel Victor and the 353-room Hotel Sax in Chicago. In New York, Thompson was tapped to take over management of a new hotel project at 5 Beekman Street, where the landmark Temple Court office building was being converted into a 297-room hotel with 90 condos by Allen Gross’ GB Lodging. (Since the break-up with Commune, Pomeranc is no longer involved in the project. But sources who know Gross say he tapped Thompson because he wanted the relationship with Pomeranc, so it’s unclear what impact the split will have on the project.)

And in May of this year, Commune launched the value brand Tommie, which is slated to open its first two properties: a 250-room hotel on 31st Street in Manhattan, and 329-room hotel in West Soho.

Problems in paradise

But by late 2012, signs of internal strife had begun to appear at Commune. Sources familiar with the company said the Pomerancs, used to operating as a small, nimble family business, clashed with the Pritzker team’s more corporate mentality. Meanwhile, the institutional investors behind Geolo Capital were growing impatient for returns.

“Pritzker comes out of a family business that ran a very large chain of hotels,” said Nakash Holdings Director of Real Estate Jon Bennett, who worked with Commune at Hotel Victor. “If you look at Jason and the kind of business they’ve run, it’s more focused on what you get if you run a smaller kind of boutique operation.”

One flare-up came about when Pritzker brought in former Kimpton Hotels president Niki Leondakis as Commune’s new CEO, effectively forcing Brandman out of the role, sources said. Brandman did not return repeated calls for comment.

After the split was announced, Pritzker told Bloomberg News that the breakup would create “better alignment between management and money.”

“It allows us to use our own capital, to grow our three brands in the way we want to, to have a single, focused management,” he said. “We won’t have two different points of view.”

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