Hotel’s Upgrade to End at Higher Side Of Early Estimates

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The bill for the sweeping renovation of the Beverly Hilton is expected to hit $60 million, up from some early estimates that pegged it at as low as $40 million.


The good news for owner Oasis West LLC is that the makeover of the 570 rooms at the legendary property will be done by the busy summer travel season.


The increased cost were driven by what turned into a major overhaul of the hotel and by high construction bills, according to Ted Kahan, Oasis West’s president. Oasis West purchased the hotel from entertainment industry giant Merv Griffin just over a year ago for $130 million.


“We made some definite decisions on what this hotel needed to be, and what we needed to do to get it there,” said Kahan, adding that construction costs weren’t a “major factor” in the decisions. Oasis West is controlled by Beny Alagem, a co-founder of computer maker Packard Bell.


Construction is on track to be completed by the end of this year, Kahan said, with the makeover of the lobby bar capping off the project. Marking the progress, the hotel’s revamped front desk will be ready to serve guests this month.


The higher costs did not surprise those in the hospitality industry. It’s often difficult to judge the scope of repairs needed at an existing hotel, especially one like the 50-year-old Hilton.


“Everybody generally accepted that the property was a little tired,” said Neale Redington, national partner in charge of the hospitality services division at Deloitte & Touche. “A renovation, as opposed to a new build, has more chance of having a problem because you don’t know what you have to fix.”


About 300 redone guest rooms are open, and 50 more will come on line this month, with the entire room inventory scheduled for completion in May. The famed 20,000-square-foot ballroom was finished in time to host the 2005 Golden Globe Awards in January.


Kahan said that nightly room rates will increase to between $275 and $325 per night, about $80 to $100 over the pre-renovation rates. In 2004, the average daily room rate in Beverly Hills was $294, according to PKF Consulting, which specializes in the hotel industry.


“The customer that we are looking for is obviously accepting the rate,” Kahan said. “It keeps us competitive within the market.”


With the travel sector perking up, the increased rates come at an opportune time. In Los Angeles, revenue per available room, a key indicator of hotel industry health, increased 13 percent in 2004 from a year earlier, compared with a nationwide increase of 7.5 percent during the same period, according to PKF.


“The market in West L.A. just ticked up dramatically in the last year, to a bigger degree than people expected,” said Bruce Baltin, senior vice president at PKF.


The Hilton has proceeded with the renovation in stages to keep as much of the hotel open as possible at any one time.

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