The hotel had been losing money and its taxes unpaid.
Jesse H. Jones offered to lease the land from the
Rice Institute and replace the existing hotel through his company, the Houston Hotel Association. Jones obtained a ninety-nine year lease with an option for a ninety-nine year extension. The Rice Institute also invested funds from its endowment to assist Jones in building another hotel. After demolishing the original Rice Hotel in 1912, Jones hired
Mauran, Russell & Crowell to design the new hotel. The new seventeen-story, C-shaped (or U-shaped) hotel opened in May 1913. In the first five years, the new Rice Hotel was losing money, but the Houston Hotel Association was able to repay its loans. Jesse Jones continued improving the building. In 1922, he installed air-conditioning in the Rice Hotel Cafeteria, the first for a public room in Houston. In 1924, he expanded the capacity of the cafeteria, but built over a basement pool (it would be discovered and re-opened in the 1998 renovation). In 1925, Jones hired
Alfred C. Finn to design a new wing for the hotel, increasing the number of rooms to over 1,000 and creating the building's current E-shaped configuration. The Crystal Ballroom was air-conditioned in 1928, the same year that Houston hosted the National Democratic Convention. More than preparing the Rice Hotel for convention delegates, Jones lured the Democratic Convention to Houston in the first place, donating $200,000 to the cause, . A famous guest was during the convention was
Franklin D. Roosevelt, the not yet Governor of New York. Jones placed a large shed on the hotel roof before the Democratic Convention to serve as temporary accommodations. This hotel deck was a popular dance venue during the 1930s. Jones continued investing in the Rice Hotel through the 1930s. The Rice Barber Shop was remodeled in 1930, and a major remodeling of the bottom floors in 1938 coincided with a new, art-deco dining area, the Empire Room. After Jones died in 1956, the estate conveyed the Rice Hotel building to the Jones family non-profit, the
Houston Endowment. The Rice continued to operate as a hotel under the management of the Houston Endowment until 1971. In 1957, Houston Endowment remodeled the Old Capital Club and the Flag Room from the previously existing Empire Room. They commissioned a five-story annex for a motor lobby and a second grand ballroom in 1958. In 1962 the Rice Hotel was used for a meeting of
NASA Astronaut Group 2 - The New Nine - all of whom booked in with the code name "Max Peck" as portrayed on the 1998
HBO miniseries From the Earth to the Moon. At the time, the hotel's general manager was named Max Peck.
United States President John F. Kennedy visited the Rice Hotel on September 12, 1962, following his "
We choose to go to the Moon" speech, and on November 21, 1963, before traveling to
Fort Worth, and then
Dallas, where he was
assassinated. Kennedy used a suite at the Rice Hotel to hold meetings, which was supplied with caviar, champagne, and his favorite beer. After a brief visit at a
LULAC event and his speech at the
Albert Thomas Convention Center, he returned to his suite for a change of clothes. After less than six hours in Houston, he headed to the airport for his flight to
Fort Worth. He also delivered his famous speech on religion in politics there to the Greater Houston Ministerial Conference on September 12, 1960. Other notable people who have orated at the Rice are
Texas Governor William P. Hobby and
Captain James A. Baker of
Baker and Botts. Notable musicians who have performed at the Rice include
Tommy Dorsey,
Perry Como,
Rice University assumed ownership of the Rice Hotel through a donation from the Houston Endowment. The university had already owned the land since 1900, and the hotel had been operating under a ninety-nine year lease. The hotel ran profitably for a couple of years. However, Rice University estimated compliance to a new 1974 Houston fire code would cost as much as $1.2 million. In December 1974, the university warned that they might demolish the hotel if they could not sell it. Rittenhouse Capital Corporation purchased the property in 1975, and briefly operated as the
Rice Rittenhouse Hotel, opening in April 1976 after being closed for remodeling. The hotel closed again in August 1977. Several entities assumed financial interests in the Rice Hotel after its August 1977 closure. The Rice Preservation Corporation purchased the Rice Hotel property at auction in September 1977. Self-made Houstonian real estate developer and entrepreneur
Lance Thomas Funston bought the property early in 1978 for $3 million, much more than the $542,962 paid at the 1977 foreclosure auction. Mr. Funston fought to secure a listing on the National Register of Historic Places and federal funding to convert the building into apartments. Although he ultimately did not raise sufficient capital or execute the federal grant, his efforts helped ensure that the building would never be destroyed, preserving it for all Texans to enjoy. In 1981, Rovi Texas Corporation purchased the property for $7.75 million and announced they would operate it as a luxury hotel. The business plan was based on federal aid of $9.7 million, which was not forthcoming. Rovi Texas allowed its bank, Frankfurt BFG-Bank AG, to assume ownership of the property. The German Bank was asking $15 million to $17 million to sell until they discovered structural problems with the building, leading them to cut their asking price in half. ==Restoration==