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Make Room for the Hotel Boom : Acceptance of Luxury Lodgings Has Developers Checking In

November 27, 1988|JULIO MORAN | Times Staff Writer

Fueled by high occupancy rates and an upsurge in office space development, hotel construction is booming in the Westside.

In Santa Monica, where a change in political climate is allowing the construction of beachfront hotels for the first time, at least six new hotels are planned or under construction. Developers are hoping to make the city into an "urban resort" area for both weekend getaways and weeklong convention groups.

In Century City, a new luxury hotel opened in June. Next month, another hotel opens across from the Beverly Center. By 1992, other new luxury hotels are expected to open in Marina del Rey, Beverly Hills and Hollywood.

Above-Average Occupancy

Despite the rash of hotel construction, consultants say there is room for all, although some older hotels may be forced to lower room rates and go after business clientele with smaller expense accounts to maintain current occupancy levels. Nightly room rates run from an average of $85 in Hollywood to $200 in Beverly Hills, according to the accounting firm of Laventhol & Horwath in the mid-Wilshire district.

Westside hotel occupancy rates, which have been above the industry national average of 70% for a few years, are expected to dip into the high-60% bracket by 1991, according to R. Britton Colbert, a partner with Laventhol & Horwath's hotel consulting division. But they should climb back into the low-70% range after most of the hotels are open in 1992, Colbert said.

Consultants believe that occupancy levels will go back up in part because of more than 5 million square feet of commercial office development that has already been built or approved for the Westside. Commercial development means an increase in business travelers.

Local government officials, even those opposed to major development, like hotels, preferring them over office buildings because they produce income without as many traffic problems.

"If the city is trying to resolve its fiscal problems in a more environmentally benign way, then hotels are more acceptable," said three-term Santa Monica City Councilman Dennis Zane, a slow-growth advocate.

Besides taxes on hotel rooms, overnight guests spend money on transportation, meals and entertainment. A 1986 survey of travel expenses by Laventhol & Horwath found that the average Los Angeles-area visitor spends $185 a day. Only $70 is spent on lodging, with the rest on other travel expenses, which in turn generate sales-tax revenues, and in some cities, user fees and utility taxes.

Ideal Place

While separate statistics on travel expenses for the Westside are not available, hotel consultants say more money is spent here than in other parts of Los Angeles because of more expensive hotel rooms, restaurants and entertainment.

Consultants and developers are optimistic about a strong Westside hotel market largely because its location makes it the ideal place in the Los Angeles area to combine business and leisure travel in one trip.

"After a full day of business meetings, Westside hotels can claim proximity to shopping on Rodeo Drive in Beverly Hills, dining in fine West Hollywood restaurants and watching the sunset over the Pacific Ocean in Santa Monica," Colbert said.

The area's year-round moderate climate is also expected to contribute to strong hotel occupancy levels.

"It is less seasonal than an area like, say, Palm Springs, where the winters are full and the summers bring discount rates," said J. Paul DeMyer, national director of hospitality consulting for Kenneth Leventhal & Co., an accounting firm in Century City. "The Westside, particularly Santa Monica, has a higher occupancy level during the summer, but it's generally strong all year."

The hotels being built are high-end, not only because they are glamorous, but because the high price of land in the Westside dictates that new hotels must charge high rates to make a profit, consultants say.

"Plain and simple, there is no way to make a middle-level hotel pencil out with the cost of land in the Westside," said John Sipple, director of Hospitality properties for Grubb & Ellis Co. in West Los Angeles.

And if clients are going to spend more than $150 a night, they want to feel like they are getting their money's worth, the consultants say.

Likened to Chateau

The JW Marriott at Century City, which opened in June as Marriott's top-of-the-line West Coast hotel, likened itself in a brochure to a magnificent chateau:

"French chateau decor is a harmony of upholstered pieces in flower-soft colors, custom armoires, marble-topped desks and dramatic floor plants. Thoughtful appointments include bedside, bath and desk phones. In the spacious marble bath are fine toiletries, hair dryer, terry robe and thick over-sized towels. Deep-piled rugs, Italian marble floors, museum-quality objets d'art and rare plants give our lobby the ambiance of the living room in a magnificent chateau."

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