The former owners of the Bel Air Hotel plan to return to the local luxury market this time with a new, super-upscale hotel in Beverly Hills.
Rosewood Hotels and Resorts would operate a 204-room property at the southeast corner of Wilshire Boulevard and Linden Drive, if the $100 million project proposed by Bahador Mahboubi receives approval from the City Council on Feb. 15.
The hotel tentatively called Grand Plaza Hotel of Beverly Hills would be the first built on Wilshire in 40 years, said project manager Rudy Cole.
"Rosewood was very interested in finding a location in West L.A. They came in and we made a deal," Cole said.
The Mahboubi family would build and own the hotel, although Dallas-based Rosewood might become an investor. Mahboubi intends to line up financing after receiving entitlements, and he already has been contacted by interested financial institutions, Cole said.
The project also must overcome an initial rejection by the city Planning Commission, which favors the idea of a hotel on the site but has concerns about size.
The proposal comes at a time when the luxury hotel market is quite healthy. Hotels charging more than $150 per night had, on average, a 72 percent occupancy rate last year, about the same as the year before. Meanwhile, rates in that category increased 3.6 percent in 1999, to a daily average of $217.26.
"There's been a dearth of new product in the luxury sector and nothing built in Southern California in the last 10 years," said Alan X. Reay, president of Atlas Hospitality Group. "It's the one area of the marketplace that's enjoyed increases in room rates and occupancies."
Any time occupancy climbs past 70 percent, developers start looking at new construction. That's been especially true in L.A. County, which ranks first in the state with 50 new hotels planned. Eleven were built here last year, the most in Southern California.
Boding well for Mahboubi assuming his project receives city approvals and adequate financing is that so few projects are actually built compared to the number planned, especially at the high end. Of the 11 local hotels opened last year, only Le Merigot and the Casa del Mar in Santa Monica are considered in the luxury class.
Reay attributed the lack of construction to tight financing, as Wall Street has shied away from hotel projects amid fears of overbuilding. The last hotel proposed in the vicinity of the new Grand Plaza site was a Four Seasons about 15 years ago, but it was never built.
While new construction may be rare, renovations certainly are not. Hotels currently undergoing multimillion-dollar overhauls include the Century Plaza Hotel and Tower, Summit Hotel Beverly Hills, Avalon Hotel Beverly Hills and Holiday Inn Hollywood. "That's the big story," Reay said.
Rosewood, which is co-owned by Caroline Rose Hunt and Maritz, Wolff & Co., specializes in luxury hotels that shun standardization, with each retaining its own identity. The Mansion on Turtle Creek in Dallas, for example, is in a palatial home built by a cotton magnate in 1925.
Lewis Wolff, co-founder and chairman of Maritz Wolff, said Beverly Hills is an ideal location for a Rosewood-operated hotel.
"We have our own market niche," he said. "We would probably be the highest or one of the highest-priced in the area. Our source of business is hopefully recession-proof."
Rosewood manages 16 hotels and resorts around the world, including London, Saudi Arabia, Tokyo and Jakarta. Rosewood purchased and renovated the Bel Air Hotel in 1982 and then sold the 92-room site in 1989 to a Japanese company, Sekitei Holdings Corp., for an undisclosed amount.
"They're extremely strong in the very upscale market," said Reay. "They're very, very exclusive."
At the company's resort in Los Cabos, Mexico, guests who need to cool off are hand-misted with a spray bottle of Evian water, and butlers at the pool will wake them if they desire. At its Lanesborough hotel in London, each room has a butler.
Of course, such amenities come with a price: Room rates run around $500 per night at Rosewood properties.
The proposed hotel in Beverly Hills would replace a two-story medical building currently on the site. It would have a rooftop pool and no banquet facilities. The Planning Commission initially denied the proposal but in doing so advised the City Council that the hotel could be acceptable if it's slightly smaller and other modifications are made, said City Manager Mark Scott. "It was not a recommendation that it be denied absolutely," Scott said.
Plans originally called for 274 rooms, but the number was reduced to 204 in response to concerns by neighbors. The building would range in height from four to eight stories, with the main entrance on Linden.
The architect is Ki Suh Park, managing director of Gruen Associates in L.A., which designed the Barneys New York store in Beverly Hills and the $300 million addition to the L.A. Convention Center.
"(Rosewood) wants to outdo themselves. The design is going to be different," Cole said.
While no other local hotels oppose the plan, Cole said a nearby Catholic school has expressed concerns about the hotel's proximity to the school and about disruption during construction. Although the hotel originally was designed to be right up against the school, an apartment building would now remain between the two properties, he said.
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