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Wednesday, Feb 21, 2024

Naming Names

After years of delays, the developers of a luxury condo near Beverly Hills are finally readying for construction. But before the $300 million development can get under way, it faces yet another hurdle thrown up by the hotel across the street.

The neighbors, on opposite sides of Wetherly Drive in Los Angeles, share more than a tony Beverly Hills-adjacent ZIP code: Both have licensed the Four Seasons name to flag their properties. That sets up an uncomfortable spat between licensees of a brand that trumpets its commitment to high quality and decorum.

Until recently, it might have been unusual for two Four Seasons properties to end up sharing a market, much less a street. But Toronto-based Four Seasons Hotels Ltd. has been on a rapid expansion program since 2007, when founder Isadore Sharp sold off most of his holdings to Microsoft co-founder Bill Gates and Saudi Arabian billionaire Prince Al-Waleed bin Talal.

Since then, Four Seasons has opened in new markets, with a focus on Asia, and added hotels in existing markets. Last year, only three cities in the world had more than one Four Seasons hotel; today there are at least seven.

There are now three Four Seasons hotels in Los Angeles, more than any other metropolitan area in the world, according to the company’s website. And Los Angeles could soon have a Four Seasons condo building.

Alan Reay, president of Irvine’s Atlas Hospitality Group, said it should have been anticipated that the two licensees would have an uneasy relationship.

“It’s a highly, highly unusual situation,” he said. “From a hotel owner’s standpoint, the amount of money to invest in a hotel project and do it to the standards of Four Seasons is huge, and with that you want exclusivity. You don’t want to see other Four Seasons developments in the same city.”

Four Seasons operates one of the most exclusive hotel chains in the world, and Robert and Joseph Cohen, co-owners of the Four Seasons Los Angeles at Beverly Hills, between South Doheny Drive and Wetherly north of Burton Way, indeed operated the only one in the L.A. area for years. But they have had to watch that exclusivity slip away.

The Beverly Wilshire hotel in Beverly Hills – less than a mile away – converted into a Four Seasons hotel in 2006, prompting a lawsuit by the Four Seasons Los Angeles against the franchisor that is still pending. A new Four Seasons hotel also opened that same year in Westlake Village.

Officials of Four Seasons Hotels did not return calls seeking comment.

Too close for comfort

The parent company’s expansion has also included condo developments branded as Four Seasons Residences.

In 2007, L.A. developer Genton Property Group LLC partnered with Boston private-equity firm Alcion Ventures LP to develop a luxury condo project on the Wetherly site, reaching an agreement with the Canadian company to brand the project. It submitted initial plans to the city of Los Angeles that year that called for 132 condo units in a 16-story building.

But it ran into heavy community opposition due to its size, as well as attacks from the neighboring hotel, which opposed it during the approvals process.

Four Seasons condo and hotel complexes have traditionally had the same owner; different Four Seasons owners on neighboring sites raise all kinds of potential problems, from brand dilution to direct competition, Reay said.

“It’s definitely competition, given the size of the condos. They’re going to dwarf the size of the Four Seasons hotel rooms,” he said.

Indeed, many recently built luxury condos tied to hotels in the L.A. area – the Ritz-Carlton Residences at L.A. Live and the Montage Residences in Beverly Hills – are marketed to out-of-towners who like the amenities and service of a hotel.

To quell the opposition, Genton made concessions on the scale of the project, cutting it back to 95 units and 12 stories. It also agreed to buy and convert a nearby property into affordable housing to make up for some of the lower-rent apartments it would demolish to make way for the project.

It also paid the local Four Seasons $15 million in exchange for dropping its opposition, according to court documents. That agreement included additional concessions such as setting a minimum lease term at the condos, apparently to curb competition between the two.

The truce struck in 2009 did not last. Genton, which is gearing up to demolish the existing structures on its site and start building, claims the Cohens have again tried to block the project.

Last month, the developer filed a lawsuit in Los Angeles Superior Court alleging the hotel owners were attempting a “shakedown” by obstructing the project. According to its complaint, Genton was rebuffed by the hotel in its preconstruction planning. Among other things, the hotel complained of the effect of construction noise on its movie junket business.

The suit appears to have forced the Cohens back to the negotiating table. A joint statement from lawyers for Genton and the Cohens said the parties were discussing a settlement.

“The parties are currently in settlement discussions and believe that the issues raised in the complaint for declaratory relief will be very shortly resolved,” the statement said.

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