WTF Happened?

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

WHEN THE W FINALLY OPENED in October 2009, the hotel pulled out all the stops, welcoming its new employees for training with a purple carpet, fake paparazzi, and a Joan Rivers impersonator. The message: Every guest should feel like a celebrity. And for a moment, it seemed like Sawyer had pulled it off. Long lines formed out the door and stayed there, with locals and out-of-towners alike clamoring to hang out at the lobby bar or dine at Market.

But with the economy still in free fall, buyers were simply not lining up to buy the residences. For starters, no amount of glitz and glamour could obscure the seediness of the location — for years, the 7-Eleven across the street had been a notorious spot for drug busts, and the corner a magnet for homeless people. “When the market is in go-go mode, people are very happy to take risks and explore different locales,” says Ken Tutunjian, a longtime condo broker in the Back Bay. “When the market constricts, people go back to more-conservative locations.”

The W still might have gained traction with urban pioneers, however, had it done more to ingratiate itself with the city. Over and over in conversations with hotel executives, real estate brokers, and developers, one theme emerges: The W expected the condos to sell based on the power of its name alone. “They were built with the assumption that people would buy in through the brand of the W,” says one broker. “I think they miscalculated what Boston is about — this is not a crowd that gets distracted by the razzle-dazzle. They get impressed by pedigree.” Another high-end broker agrees: “It’s a national brand which is über-hip — which most Bostonians hate to think about,” he says. “They came in here thinking we’d all just roll over on our backs. When that didn’t happen, they didn’t have anything to follow up with.”

The W’s parent company, Starwood (which also owns the Sheraton and Westin chains), introduced the hotel to the city by bringing in Jack Yeaton, a handsome young publicist from New York. Yeaton took the city by storm in the summer of 2009. Suddenly he was everywhere, showing up at every party, charming the media and the social crowd alike. But just as quickly, he began alienating people. That started with the cards he would give out to VIPs, supposedly granting them the power to skip the long line at the hotel’s door. Those VIPs were then irked when the doormen didn’t know anything about the cards, and refused to honor them.

Then there were the promises he allegedly made to sponsor events in the hotel, which never materialized. “He said, ‘I’ll do this for you’ and then you’d engage with him, and the day would come and he’d avoid your phone calls,” says one fashion-design professional. For his part, Yeaton insists that the whole thing was simply one big misunderstanding. The cards he handed out allowed people to move to the front of the line, he explains, but didn’t entitle the holder to enter a hotel lobby that was already too full of revelers. “The card wasn’t a free-for-all,” Yeaton explains. As for the claims that he failed to deliver on the commitments he’d made, Yeaton says there were just too many requests. “We couldn’t do them all…. I rubbed some people the wrong way, and that’s unfortunate,” he says. “But I was trying to change the landscape of the town, and you can’t do that without riling some people up.” Still, one scenester has a different take: “Boston is a city of relationships. This is not New York. People don’t flock to the next hot spot; they go someplace because someone they like goes to it.”

So, how do you connect with the city? Contrast the W’s struggles with what was going on at the Liberty Hotel, the reimagination of the old Charles Street Jail by local hotelier Dick Friedman. The Liberty was going out of its way to court the Boston establishment, hosting weekly events with area fashion designers and bringing in a steady stream of local glitterati.

In fairness, though, Yeaton was far from the W’s biggest problem. The hotel had plenty of stiff competition, primarily two other nearby condo projects: the Clarendon and 45 Province, which feature larger units with more-upscale furnishings. “The units at the W are so small; there is no demand for smaller units,” says luxury condo seller Beth Dickerson. “I think they made a mistake.” While those other properties have also struggled in this economy, both have done better than the W — to date, the Clarendon has sold 48 units with an average price of $1.7 million, and 45 Province has sold 26 units with an average price of $1.2 million. The W — which has sold another 15 units since filing for bankruptcy protection, bringing its total to 27 — has had an average sales price of just $862,000.

Based on their performance, both the Clarendon and 45 Province have been able to renegotiate more favorable terms for their construction loans. Sawyer’s owner, Carol Sawyer Parks, says she tried to do the same thing with Prudential, but they would have none of it, leaving her with bankruptcy as the only way out. “I felt a bit like David must have felt when he found Goliath,” says Parks. “There were just no options left, and I had to protect the assets.”

Prudential declined to talk for this story, but in court filings, the company claims it did make Sawyer an offer the day before the bankruptcy protection filing. One developer speculates that Prudential may itself be under pressure from regulators to reduce its debt. If so, the company could be looking to cut its losses at the W by taking over the hotel and slashing the prices of the condos to quickly turn them into cash. Sawyer’s lawyer Harry Murphy, however, has a different take. “They see an opportunity to take ownership and control…and make a more handsome return,” he says. “They want to own it.”