Sheraton Puerto Rico Convention Center Hotel & Casino

Empresarios magazine spoke exclusively with Federico Sánchez Ortíz, President and CEO of Interlink Group, and José Delgado, Senior Vice President and Partner.

The conversation centered on the almost finished Sheraton Puerto Rico Convention Center Hotel & Casino. This project has great significance for the tourism industry. Since the opening of the Ritz Carlton San Juan Hotel, Spa & Casino in December 1997, there have not been any other new hotel constructions in the San Juan metropolitan area for over a decade, a fact that illustrates the challenges facing the construction and tourism industries.

The most recent economic indicators from the Government Development Bank (GDB) point out that there has been a marked decrease in the number and value of construction permits over the past year, as well as in the number and value of new dwellings. The total value of all construction permits decreased from $2.287 billion in the first eleven months of fiscal year 2008 to $1.669 in for the same period in fiscal year 2009. Equally, the quantity of permits for private construction is now significantly lower. In the first eleven months of fiscal year 2008, commercial permits numbered 6,607. For the same period in fiscal year 2009, the permits totaled 5,152.

The construction of the Sheraton Puerto Rico Convention Center Hotel & Casino, which began on 2006, comes at a critical time for the tourism and construction industries. An even greater feat is that the Sheraton Puerto Rico Convention Center Hotel & Casino is, according to Sánchez, “on schedule and on budget.”

The $210 million construction investment for the new hotel was provided entirely by the private industry, while still taking advantage of the most recent tourism incentives from the government. Delgado explains that this number includes everything, including the financing by private banks, led by FirstBank, Scotiabank, and Banco Santander. Sánchez adds that the Government Development Bank played an important role through its Tourism Development Fund, which provided guarantees to the banks that financed the project. “However, the guarantee does not go into effect until the construction loan turns into a term loan. The private industry took on the construction risk.”

The project is set in such a way that Interlink is the managing partner. Both executives pitch in to explain that the managing partner executes all the functions of an owner. They are, therefore, the project leaders. The executives explained that, in order to keep a realistic schedule and budget, they made sure that the appropriate reserves were in place to take care of expenses that could not have been forecast beforehand. “We wanted several buffers to make sure that we were covered in the best of cases and in the worst of cases,” states Delgado.

During its current construction phase, the new hotel has generated between 900 to 950 direct jobs plus another 550 indirect ones. Once the hotel opens, both Sánchez and Delgado expect the hotel to generate 500 direct jobs, which would be divided between the hotel and the casino. An additional 300 jobs could be created once the spa, restaurants, and retail spaces are opened.

STATE OF THE ART CONSTRUCTION AND MATERIALS

A walk through the construction site reveals the inner workings of a hotel built with the future in mind. More than 10 years that have passed since the last new hotel in the San Juan metro area was built and technology has improved considerably. This lone fact gives the Sheraton tremendous advantage over its competitors. “This hotel will have technology that hotels in Puerto Rico or even the United States do not have,” states the President and CEO. “The hardwiring and technology that this building will have will supply the needs of, not only the hotel, but those of the guests as well, because the connectivity available will be the most advanced.”

The hotel will have 503 contemporary guest rooms, 22 of which are suites. With a November 2 soft opening, the pressure is on to complete the project on schedule. Yet Sánchez is relaxed, saying that “it is 90% complete. Most of the work to be done is in the rooms and suites themselves.”

One of the building’s main features is its eco-friendliness. Some of the more advanced characteristics include low-e glass, which minimizes the transference of heat through glass. Also, the gypsum board used in the construction is recycled and mold proof. “All of the mechanical and
electrical systems have been more expensive yet energy efficient,” explains Delgado, while adding that the “air conditioning system is a cooling plant that also provides cold water to other projects within the same block. Therefore, we are creating a structure that will benefit other projects. ” These and other measures are being taken so that the building can be considered for a Leadership in Energy and Environmental Design (LEED) Green Building Rating from the U.S. Green Building Council. “One of the main benefits of being a LEED building is that it helps lower the energy costs up to 25%,” adds Sánchez.

A STRONG RECORD

Interlink has a long established reputation in hotel and luxury residential development, with over 30 years of experience in the industry. “We have done commercial projects in the past, such as Centro Europa in Santurce and City View Plaza’s first phase, but our strength lies in residential
and hotel projects,’’ asserts Sánchez. Interlink’s first project in 1977 was the remodeling of the Laguna Wing of what is now the Condado Plaza Hotel and Casino. The company was challenged to integrate the Laguna Wing into the existing structure on the other side of the street in 90 days
and it met its challenger head on, completing the project on schedule.

Other remodels followed, such as the San Juan Hotel in 1986, the Sands Hotel (currently the Intercontinental) in 1987. One of Interlink’s most notable projects is the restoration of the historic El Convento hotel in Old San Juan. The company also worked on the first phase of Las Casitas in
El Conquistador Resort and Golden Door Spa. “Las Casitas was the first condo hotel project built in Puerto Rico under the 1993 incentives law,” says Sánchez.

FUTURE DEVELOPMENTS

Interlink plans to go beyond the new Sheraton. The company already has a five to ten year strategic plan in place. However, Sánchez believes it best to finish the projects the company has already started and to do a good job at it. “We see great potential in the convergence of the residential and hotel industries,” he adds. “Not every building has to be luxurious but [it has to
be] well done.”

The developing company is already working on the construction of Bahía Beach Resort & Golf Club, a resort located before two miles of beach in Rio Grande. There are residential projects located within the resort and will take from ten to twelve years to build. “The Bahía Beach Resort & Golf Club is the first hotel in the Caribbean to be Gold Signature certified by Audubon
International,” states Sánchez. According to the Audubon International website, the Audubon Signature Program “provides comprehensive environmental planning assistance to new developments. The program helps landowners and developers design for the environment so that both economic and environmental objectives are achieved.” The Gold Level is the highest any project can achieve. Interlink is currently working on three of these projects and will continue to working on the others throughout the years.

Another such project is the St. Regis hotel, which is currently at a 50% level of completion and is scheduled to open in the last quarter of 2010. “We have been working on the construction of this project for the past fifteen months,” reiterates Sánchez. Delgado explains that this is a smaller, low rise hotel with 139 guest rooms. “This is a high-end project,” states the Senior Vice President & Partner.

While Interlink’s focus is mostly on the successful combination of residential and hotel projects, the company is currently developing a luxury apartment building in the Miramar area appropriately named Cosmopolitan.

Given that the Sheraton Puerto Rico Convention Center Hotel & Casino is almost finished, Interlink is already looking forward to future expansion. Under the Aloft brand, the developers hope to build another 250 guest rooms for the more budget conscious traveler. “We hope to begin construction in 2010,” states Delgado.■