Jacques and Rakel Cohen say they were looking for a challenge for their first development project — and they found it in the beleaguered Watergate Hotel, which they bought at auction six years ago.

They paid $45 million in cash for the foreclosed property, hailed as a trophy hotel when it opened in 1967 with an indoor swimming pool and views of the Potomac River. But in more recent years, the Watergate had fallen into disrepair and has remained vacant since 2007.

Now, the Cohens, a married couple from New York, are reopening the hotel after a six-year, $125 million renovation. They gutted the hotel and rebuilt it, adding 85 guest rooms, 17,000 square feet of meeting space and a rooftop bar. Its grand opening is scheduled for Tuesday.

“Back in 2009, 2010, we looked at quite a few options all around the country, but the Watergate stood out as a property where we could make a statement,” said Jacques Cohen, 37, who hails from a prominent family of Parisian real estate developers. “This is what we believe true hospitality is. It’s not about making cookie-cutter hotels.”

Among the Watergate’s amenities are a restaurant, spa, swimming pool, whiskey bar and cigar lounge. Much of the furniture throughout the property has been custom-made to look like it’s from the 1960s, and employee uniforms were created by “Mad Men” costume designer Janie Bryant. Guest key cards say “No need to break in,” in a nod to the Watergate burglary scandal at the nearby office building that led to the resignation of President Richard M. Nixon.

The new whiskey bar. (The Watergate Hotel)

“We knew this had to be a luxury, 1960s retro hotel from the get-go,” Cohen said. “It had so much potential that nobody else saw.”

The Watergate Hotel switched hands a number of times in the decades after its opening. Blackstone Real Estate Advisors, real estate affiliate of the private-

equity firm, took over the property in 1998 and sold it six years later to District-based Monument Realty, which planned to convert the 251-room hotel into luxury co-op apartments. But the economy soon soured and Monument’s financier, Lehman Brothers, went bankrupt.

Monument defaulted on its $40 million loan, sending the property into foreclosure. The Cohens’ hotel real estate development and management company, New York-based Euro Capital Properties, bought the property a year later, with plans for a two-year, $50 million renovation.

Soon, though, it became clear this would become a much bigger project.

“This was a hotel that had a lot of physical challenges,” said Cohen, whose family previously owned and restored the Hamilton Crowne Plaza on K Street NW. “We had to do a tremendous amount of work.”

Among the biggest hurdles, he said, was the renovation of the ballroom, which included raising its ceiling by seven feet. To do so, the Cohens had to demolish — and later rebuild — a garden in the Watergate Complex that sits above the hotel’s ballroom.

The revamped Watergate is opening at a time of brisk development and slowing demand. Fourteen new hotels, not including the Watergate, are scheduled to open in the Washington area this year, up from 11 openings last year, according to research firm Lodging Econometics. An additional 16 hotels are planned for next year.

A sketch of the concierge uniform. (The Watergate Hotel)

Luxury hotels in particular have been lagging behind the rest of the hotel industry for the past year, and analysts say competition from the coming Trump Washington D.C. — another historic property undergoing a nine-figure renovation — may make it particularly difficult for the Watergate to break into the market.

“What we’ve seen, by and large, is that luxury hotels aren’t doing all that well,” said Ryan Meliker, a lodging analyst at Canaccord Genuity. “Growth is much slower in luxury than it is in the rest of the industry, and a lot of that is because of softer demand at the high end.”

Some say the Watergate’s history could prove to be a special draw.

That was the case for Kelley Drye & Warren, the New York-based law firm that last week held its annual Advertising and Privacy Law Summit in the Watergate’s ballroom.

The one-day meeting, typically held at the House of Sweden, home of the Swedish and Icelandic embassies, drew 110 guests. Session names included “Follow the trail,” “I am not a crook,” and “Deep throat” — a discussion on how to deal with whistleblowers.

“Of course we had some fun with it,” said Christie Grymes Thompson, a partner at the firm. “Given the historical significance of the complex, we figured it was a terrific place to discuss deception, public policy and invasion of privacy.”