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Century Plaza Aims to Divide, Conquer

Hotels: Owners hope to best competition by splitting Century City landmark into Westin and 5-star St. Regis.

August 01, 2000|STEPHEN GREGORY | SPECIAL TO THE TIMES

Owners of the Westin Century Plaza Hotel expect to pump new life into an aging landmark next month when they split the hostelry in two and open the doors to an up-market St. Regis hotel in the high-rise portion of the Century City property. It will become one of the few joint operations of four- and five-star hotels in the country.

The lazy-horseshoe-shaped main building, which opened in 1966 with 724 rooms, will be called the Westin Century Plaza Hotel and Spa and marketed largely to upscale mobile business and leisure travelers.

The neighboring 30-story tower, added in 1984, will debut as a five-star St. Regis, patterned after its New York namesake and targeted at the same luxury-conscious clientele courted by a few other tony urban retreats operating on the Westside.

Such "double-branding" has been picking up steam over the last five years among lower-priced hotel chains such as the full-service Holiday Inn and discount-priced Holiday Inn Express, industry analysts said, but the Westin Century Plaza/St. Regis combination--both owned by Phoenix-based Pivotal Century Plaza Hotel LLC--is one of only a handful of such arrangements among upper-market properties.

New Look for Century Plaza

Each hotel is getting a $35-million face-lift and the repackaged pair will each have its own lobby, restaurants and amenities. They will no longer be connected by an underground concourse as they had been when they were operated jointly as the Westin Century Plaza Hotel and Tower.

Westin, which along with St. Regis and three other hotel chains is operated by Starwood Hotels & Resorts Worldwide Inc., will continue to run the Century Plaza as it has since the facility opened. By the time renovations are finished at year's end, the Century Plaza is expected to have a completely new look, 95,000 square feet of meeting space and a state-of-the-art Asian-themed spa as its centerpiece.

With its renovations expected to be completed Sept. 1, the new St. Regis hopes to compete with such established luxury venues as the Peninsula and the Regent Beverly Wilshire with a roster of first-class amenities including butler-assisted unpacking, twice-daily maid service and high tea served daily in the lounge.

Local hotel industry analysts called the double-branding scheme a wise move for the Avenue of the Stars property, which they said had been underutilized and poorly marketed for much of the last 15 years.

Designed with input from the Secret Service to facilitate the security of visiting VIPs, the Century Plaza opened with much fanfare as a cornerstone of the gleaming new Century City real estate development. With its separate underground entrances and private elevators, the hotel has hosted every president since Lyndon Johnson and a number of foreign dignitaries including recent visits by leaders from Greece, China and Armenia.

Its popularity didn't stop with statesmen. During its first 20 years, the hotel enjoyed an average annual occupancy of roughly 90%, Pivotal Group Chief Executive Francis Najafi said.

Three hundred additional rooms ushered in with the tower and long stretches without major capital improvements, however, sent average occupancy plummeting to around 50% shortly before Pivotal purchased the property in February 1999 for $260 million.

The property had been on the market since the early 1990s, and its former ownership group, anchored by Japanese insurer Nippon Life, reportedly had difficulty making mortgage payments. For much of the 1990s, average daily room rates stagnated at $150 to $160, Manhattan Beach hospitality consultant Jack Westergom said.

At the same time, said Ted Darnall, president of Starwood's North American Division, the hotel suffered from a "gray and fuzzy" marketing strategy that left unclear whether its target audience was business, convention or leisure travelers.

Double-Branding to Broaden Market

In early 1999, Darnall said, the property's new owners approached Starwood with the idea of double-branding the hotel in order to focus more tightly on specific niches and thereby increase overall market share.

Said Pivotal's Najafi: "The hotel the way it was didn't have enough demand to fill 1,000 rooms in one location given the same niche. They did well with group travelers but not too well with independent weekend travelers."

With its new make-overs and identities--the Westin focusing on urban professional and meeting business and the St. Regis targeting the luxury market--Najafi thinks the property will regain its stature as one of Los Angeles' foremost hotels and the increased revenue that goes along with that.

Within 12 to 18 months, he predicts, the Century Plaza will see average room rates as high as $220 and the St. Regis will command an average of $350.

Jim Butler, who tracks the hospitality industry for his Los Angeles law firm, agrees. "The St. Regis image will permit it to harvest a higher room rate than what it is now," he said. "It's a more expensive brand, more upscale."

Double-branding is expected to allow the property to capture a larger share of two distinct markets while saving $1 million annually through shared services such as laundry, accounting and human resources.

It's a formula that fell into Starwood's lap almost by chance when it acquired the Westin and Sheraton chains in early 1998 and was left operating adjacent hotels in Orlando, Fla., and Dallas. Both properties have been Westin/Sheraton hybrids ever since.

The Los Angeles experiment marks the first time Starwood has paired a Westin and St. Regis, but Darnall is optimistic the four-star/five-star combination will work.

"What we've done in L.A. is a little bit easier because we have clearly two different market segments," he said. "The end result is that we have the opportunity for greater market share at a lower cost of operation."

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