It's the first ultra high-end hotel to open in Los Angeles in 17 years. As a result, the Montage Beverly Hills is causing a stir among other top-tier luxury hospitality establishments.

The Montage complete with a two-story spa and the complementary use of a Mercedes-Benz for some guests increases the number of rooms in L.A.'s top-end hotel market, where standard room rates start at $500 a night, by 25 percent.

What's more, the segment just below the Montage where room rates start in the $400 to $500 range is seeing a bigger bulge. The SLS Hotel at Beverly Hills opened two weeks ago, and a W Hotel in Hollywood and a Ritz Carlton at the L.A. Live complex downtown are under construction. Those three hotels will expand their pricey market segment by 53 percent.

Indeed, Los Angeles has not seen such a surge in high-end inns for decades. And those rooms are now starting to come on the market just as the economy is checking out.

Driven by the need to stand out from the competition and expand clientele at a time of economic uncertainty, hotels are offering guests some extra-special perks.

At the nearby Peninsula Beverly Hills hotel, which opened in 1991 and was for a long time L.A.'s only five-star hotel, has started offering perfumed rooms and luxury treatment for guests' dogs. (See related article.)

Raffles L'Ermitage Beverly Hills has begun offering free transportation to and from local airports for all guests, as well as the use of a Ferrari, Bentley or Lamborghini for guests staying in the highest-priced suites.

The Four Seasons Beverly Hills is planning to renovate its rooms and pool area next year. Along with the Beverly Wilshire, which is also a Four Seasons property, the hotel is offering a third night free for every two paid nights.

And the Montage, which opened Nov. 17, kept its prices lower than they could have been even though rates shoot up to $7,500 a night for the presidential suites. The hotel also offers promotional packages, said Ali Kasikci, who left the rival Peninsula to become the Montage's managing director. But that's not because he's worried about filling the rooms.

"We are competitively priced and have taken into account economic conditions, but we didn't want to panic because of what has happened in the last few weeks," he said. "The dollar is the same dollar to everyone, and the affluent are affected by the economy, too. But we wanted to price appropriately for the market. There's no 'panic, panic.' "

Other hotel managers are watching the Montage with interest.

"What Ali Kasikci does at the Montage is going to raise the bar for the rest of us in this town," said Jack Naderkhani, general manager of Raffles L'Ermitage. "But when it comes to the other properties, it's not what we do better, but what we do differently. We don't have to lower rates to get guests to come. We add value."

Forecasters see the hospitality sector struggling through 2009, and the luxury sector won't be immune.

The Westside luxury hotel market, which includes the highest-priced hotels in Beverly Hills, is expected to see a 1.5 percent drop in business to just below 74 percent in room occupancy by the end of the year, according to a new study by PKF Consulting Corp.

That's still a good number, says Bruce Baltin, senior vice president at PKF. But that number is projected to drop to 69 percent in 2009, which is below the 72 percent that is considered a healthy occupancy rate.

The Montage, due to its location in central Beverly Hills and its two-story spa, may draw guests from its competitors. But in the long run, hospitality experts say, the hotel will complement the luxury sector more than it will take guests away from its competitors such as Peninsula, Beverly Wilshire and Beverly Hills Hotel, which also charge standard rates starting at $500 a night.

Rick Kirkbride, who represents high-end hotels at law firm Paul Hastings Janofsky & Walker LLP in Los Angeles, said the novelty factor will bring heads to Montage beds. People will want to try the Montage during its first year even if they normally stay at one of the other luxury hotels.

"But those people clearly already have their favorites because they develop relationships at those hotels," Kirkbride said. "So they'll stay at the Montage and then make up their minds. But there's plenty of business for all of these hotels. It's exciting to see a new hotel opening of this level. It's been a long time."

Classic luxury

The Montage's opening will bring 201 top-tier luxury rooms into the market. (As of last week, not all Montage rooms were available to the public finishing touches were still being applied, and the elevators weren't programmed to stop at all floors.)

The eight-story, $180 million hotel offers glamour fit for Beverly Hills.

Operated and partly owned by Montage Hotels & Resorts, which also operates the Montage in Laguna Beach, the hotel sits between Beverly and Canon drives just north of Wilshire. The gardens and retail building are owned by the city of Beverly Hills but were built and are maintained by the Montage.

Its architecture is in the Spanish colonial revival style. Notable features include a pool and two restaurants on the roof one casual, one exclusive all with expansive views of Los Angeles.

The interior of the hotel houses two other restaurants, one with an open display kitchen that allows guests, if they so desire, to go chat with the cooks while their meals are being prepared. There's also a lounge for afternoon tea and a library that houses artwork as well as books.

Another selling point is the spa, which offers a hair salon from celebrity stylist Kim Vo, a 24-hour fitness center with a yoga room and a mineral pool.

Details of the hotel design elements were selected with a sense of luxury in mind. Some of the hand-painted tiles were imported from Portugal. The rooms overlooking the gardens feature giant flat-screen TVs and bathrooms equipped with a small flat-screen for viewing from the tub. The showers have a fog-free shaving mirror.

Where the Montage exudes classic, understated luxury, the recently opened SLS, owned by nightclub impresario Sam Nazarian's SBE and operated by Starwood Hotels & Resorts Worldwide Inc., is young, hip and cutting-edge.

The SLS is in a Philippe Starck-designed building on La Cienega Boulevard at the eastern edge of Beverly Hills and offers plenty to look at, including a dining and retail space with styles ranging from chic to outlandish. That range is reflected throughout the SLS.

Alice in Wonderland-esque

Green and red lights illuminate different parts of the main floor. The ballroom has oversized hanging lamps and equally oversized circles on the carpet. The rooftop features two pools: one for swimming, and another that offers seating on furniture placed in a few inches of water. It's all very Alice in Wonderland-esque.

The SLS is also considered a luxury hotel, but it's in a lower tier those with rooms starting at $400 a night. SLS charges up to $5,000 for its larger suites.

"SLS is the wild card," said Kirkbride of Paul Hastings. "That hotel has a better chance of taking some of the younger guests from the other hotels, particularly if those guests don't have to be in downtown Beverly Hills."

PKF's Baltin noted that Montage and SLS were planned before the downturn.

"They didn't know they would open (in a bad economy)," he said. "The first year won't be as good as it might have been otherwise, but in the long term, these hotels will be fine. They're good additions."

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