WTF Happened?

Fourteen months ago, the W Hotel was the hottest property in the city. Today it has filed for bankruptcy protection.

WALK INTO THE RESTAURANT of the W hotel on a Thursday night, and the place is a cross section of status. The other marquee Theater District restaurants have only a few stragglers, but Market — opened by celeb chef Jean-Georges Vongerichten — is packed. Crossbeams throw shadows on clusters of white shirts and ties straight from the office. Three women in head-to-toe black are doing a girls’ night out over miso halibut. A Japanese businessman eats dinner solo, against floor-to-ceiling windows and netted curtains that are left open not so diners can look out on the tired flash of the Theater District, but so passersby can envy the privileged throng inside.

The abutting lobby bar is even more crowded. “Come on, let’s go get drunk,” announces one thirtysomething emerging from the bathroom. “I’m already too drunk to fix my makeup,” whines her companion, a bright-red streak of quite fixable lipstick on her cheek supporting her claim. Liquidy techno drips from the speakers above the bar, drowning out the banter as finance guys hit on cocktail waitresses while lovelies in skirts too young for them lounge immodestly against purple feathered pillows. The Patr’n flows.

To the out-of-towner — and there are many here — this is as cool as it gets in Boston. Indeed, when the W Boston Hotel and Residences opened in October 2009, it was the most anticipated debut in the city since the new Ritz-Carlton nearly a decade earlier. Among “lifestyle” brands, the W is the global king, sought out by scenesters in cities around the world for its blend of cheeky, sexy sophistication. So when the hotel opened here at a crossroads in the Theater District, pundits saw it as proof that Boston had finally shaken off its Puritanism and sashayed proudly down the runway alongside New York, Miami, and L.A.

Then something happened. Less than a year after the hotel opened, in April 2010, the company that built it — an affiliate of old Boston firm Sawyer Enterprises — filed for Chapter 11 bankruptcy protection. And its lender, Prudential Real Estate Investors, began pushing for foreclosure, the first step toward taking over the hotel. How could it be that the hottest spot in town was suddenly in danger of closing its doors? It turned out that while the W’s glamour and bustle were supplied by its restaurant and hotel operations, the profit required to keep the whole thing afloat was supplied by something else: the sale of the high-end condo residences. That was the plan, anyway. The W was meant to have sold half of its 123 condos before it even opened, but by the time of its Chapter 11 filing on April 28, it had sold exactly 12.

In part, the economy was to blame; the W couldn’t have opened at a worse time for home sales. Then again, other luxury condo complexes that opened at the same time have managed to be successful. So why not the W? The customers at the hotel’s bar provide a clue. The only thing missing from that uproarious scene are local regulars — the sort that crowd the bars at competing new hotels like the Liberty and the Mandarin Oriental. The latter sold out its own residences a year before the W opened. And while it’s true that the Mandarin caters to a more-upscale clientele than the W, it does so by projecting prestige rather than trendiness. To a Boston buyer, this distinction is crucial — the difference between a one-night stand and a relationship. High-living Bostonians seem happy to stop into the W for the occasional post-show cocktail or dinner at Market, but the question is, Do they actually want to live there?

The answer to that question will decide the fortunes of one of Boston’s most successful family businesses. The fall of the W is a story of who’s an insider and who’s an outsider, who’s from Boston and who’s from New York, and who’s sophisticated rather than merely trendy. And by the way, it’s more than just Sawyer Enterprises’ money that’s on the line. It’s yours, too. The city of Boston gave Sawyer $10.5 million to finish the project — most of which it stands to lose if Prudential wins the fight to foreclose on the hotel.

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