The Texas oil baron's daughter who bought Los Angeles' luxurious Hotel Bel-Air in 1982 has put the property on the block, and real estate experts said the price could reach astronomical levels.
Dallas-based Rosewood Property Co., formed by Caroline Rose Hunt, said it is selling the 92-room hotel--patronized frequently by movie stars and other celebrities--because it believes that the move will "realize an outstanding profit." Rosewood bought the hotel from the Joseph H. Drown estate for about $22.1 million and believes that it is now worth $1 million a room.
"I have no doubt that we'll get more than that," a company spokeswoman said.
Investors all over the world have expressed interest in acquiring the one-of-a-kind property, Denny Alberts, Rosewood chairman and chief executive, said in a statement. "Because of its world-class reputation, we have for some time had incredible investor interest in the property at world record prices. We believe that it is an appropriate business decision for us to realize an outstanding profit at this time by selling the Hotel Bel-Air while maintaining a management contract," he added.
The company said proceeds from the sale would be used to help it expand by taking on management contracts rather than acquiring properties. Still, "in many instances it is necessary for a hotel company to be a limited investor . . . as well as the operator," Albert said. "We will utilize the capital raised from the sale of the Hotel Bel-Air to obtain selected management agreements in key markets throughout the United States," he said.
A 'Trophy' Property
Rosewood has retained Morgan Stanley Realty Inc. to negotiate the sale. "We think the price paid per room for the Hotel Bel-Air will become the standard by which all future transactions will be measured," Morgan Stanley Realty Chairman Bill Bahrenburg said.
Consultants and appraisers who specialize in hotel properties said $1 million per room is a farfetched figure only if the proposed transaction were assessed purely in terms of the cash that the hotel generates. However, such a price is conceivable because the Hotel Bel-Air is a premier, "trophy" property, for which a wealthy investor might be willing to pay a huge premium.
Because of its reputation for service and longtime status as a favored home away from home for the world's elite, its secluded setting in Bel-Air's Stone Canyon and other "intangibles," the sale of the hotel would be roughly comparable to selling a work of art, said Paul DeMyer, national director of hotel consulting at Kenneth Leventhal & Co.
The hotel, about one mile west of Beverly Hills' Rodeo Drive, features several buildings spread over an 11.5-acre site. The hotel has a variety of room and suite sizes, layouts and views. Guests also have private entrances to their accommodations from the hotel gardens.
Part of an Empire
The hotel has the highest occupancy rate in the Los Angeles, according to industry sources, with rooms starting at $195 a night and suites going for as much as $1,300 a night.
The value of the real estate wouldn't be the factor behind the bids for the Hotel Bel-Air, said Ronald R. Saunders, a principal in Ronald R. Saunders & Associates, a consulting and appraisal firm. The sale may attract a very high price from someone "trying to make a mark. The hotel becomes a part of his empire," Saunders explained.
Los Angeles hotel properties have fetched handsome sums in recent years. The Sultan of Brunei reportedly paid about $185 million, or about $711,000 per room, for the 260-room Beverly Hills Hotel in 1987. That was about $50 million more than tycoon Marvin Davis paid for the hotel less than nine months earlier.
Since acquiring the Hotel Bel-Air, Rosewood Property has spent about $6 million on a major renovation of the hotel's rooms, suites and private bungalows. The company owns five other hotels, including the Mansion on Turtle Creek in Dallas.