Hotelier’s Commission Appointment Sparks Concern

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Hotelier’s Commission Appointment Sparks Concern

By DEBORAH BELGUM

Staff Reporter





Electing the owner of downtown L.A.’s largest hotel as president of an advisory commission on convention center operations is raising howls of protest from some corners of the hotel and tourism industry.

Peter Zen, president of FIT Investment Corp., owner of the 1,354-room Westin Bonaventure Hotel and Suites, has been on the Convention Center Department Commission since his appointment by Mayor James Hahn in October. But his April 3 election as president of the five-member body has brought concerns about conflicts of interest.

The Westin Bonaventure is downtown’s primary convention hotel and some hotel managers have complained that in his new role Zen will steer business to the property and work to block a new hotel proposed as part of the Staples II project.

“He has an opportunity to influence city decisions as it relates to the new hotel, which he believes is not in his best interest,” said Cormac O’Modhrain, general manager of the Park Hyatt Los Angeles in Century City.

“This is ludicrous,” Zen said of the charge. “I will definitely recuse myself if we discuss something that is a conflict of interest.”

Zen’s spot on the commission, which has no role in booking conventions, was defended by the Hahn administration. “Peter Zen was put on the commission because he is a great spokesman for downtown and getting business there,” said Deputy Mayor Matt Middlebrook. “He wants every hotel to be full.”

Zen is the only hotel representative on the five-member commission. George Rakis, the convention center’s general manager, said he doesn’t recall a hotel owner being on the commission within the last 15 years.

Public role derided

Zen says his objection to the Staples II hotel project doesn’t stem from potential competition but a desire to see the project funded privately.

The proposed 1,200-room hotel is part of a planned $1 billion project that would include a 7,000-seat theater, retail and office space, to be built by L.A. Arena Land Co. Next week, the commission is scheduled to review the proposed Staples II hotel.

“Competition is healthy as long as it is on an even playing field,” said Zen, noting that the hotel should be built strictly with private funds.

But analysts note that a new hotel won’t be built soon unless city subsidies are used to help pay for the $245-$280 million project. “Finding hotel financing is difficult right now,” said Bruce Baltin, senior vice president of PKF Consulting, which tracks hotel occupancy rates and advises hoteliers. Baltin is also a consultant to the Los Angeles Convention & Visitors Bureau.

“Right now the downtown occupancy rate for hotels is around 40 to 50 percent,” Zen said. “If they (L.A. Arena Land Co.) believe another hotel is such a good deal, why not just build it?”

Hotel managers and members of the LACVB believe that without the new hotel, Los Angeles will lose its competitive edge in attracting conventions to the city, whose bookings have slid since 2000 when Anaheim and San Diego expanded their facilities.

Ethics review completed

While critics said Zen shouldn’t be on the commission at all, his appointment was reviewed by the L.A. Ethics Commission, which noted in a Sept. 21 letter that his business interests might conflict with some agenda items. Thought it warned in the letter that Zen should check with the city attorney if he felt a conflict might occur, the commission did not object to his appointment, which was confirmed in October by the City Council.

Aside from Staples II, Zen has been complaining that the LACVB’s sales force has not done its job in booking conventions. That, he has said, is one reason the downtown occupancy rate has hovered around 50 to 56 percent in the first two months of the year.

But industry experts note that the reason has more to do with the after-effects of Sept. 11. “Zen is using this commission as a leverage to turn the knife on the Los Angeles Convention & Visitors Bureau,” O’Modhrain said.

John Stoddard, manager of the 900-room Wilshire Grand Hotel, downtown’s second largest hotel, complained in a letter to the Ethics Commission that “the decisions and staff directive he makes as a commissioner will impact the business operations of hotels, including and in particular, the hotel he owns.”

But Zen’s advocates said his expertise will help the convention center commission do a better job.

“It’s a breath of fresh air to have someone on the commission who understands the visitor and convention business,” said attorney Lesa Slaughter, a new member on the convention center commission.

Cynthia Puertas, an attorney and commission member, said, “I don’t think Peter’s interests are in conflict with the Los Angeles Convention Center. His interest is to see downtown L.A. develop and improve economically. And that is what the other commissioners hope for too.”

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