Hotel construction gets a wake-up call in 101 Freeway corridor





By John Loesing
Acorn Staff Writer

The hotel industry appears to be awakening from its slumber, especially in the local region where almost 1,000 new beds are expected to be added in the next few years.


The recession and fear of traveling put the hospitality industry into a deep sleep following Sept. 11 and dropped the occupancy rates at many of America’s major hotels to less than half.


Locally, hotels are making a comeback, however. From Calabasas to Thousand Oaks, three new hotels are being built, another just opened and a fourth has undergone major renovation.


"The area has great demand and very little supply," said David Lewin, general manager of the Hyatt Westlake Plaza. "It’s really just simple economics. Big cities like L.A., San Francisco and New York have lots of supply and right now no demand because the economy’s bad. Here the equation is a little different. There’s a lot of big companies that are still doing very well."


Gary Wartik, Thousand Oaks economic development manager, agrees that the rapid business growth in this area spawned the need for new rooms.


"About five or six years ago, some of the hotels looked at the area and concluded the time was not right, meaning they didn’t think the facilities could be supported by the community," Wartik said. "What’s occurred is we’ve had five years of very strong growth with companies like Baxter Pharmaceutical and Amgen."


One developer eager to take advantage of the new swirl of business activity is Bob Selleck, who plans to build a $23 million commercial project in Thousand Oaks that includes two hotels.


The 101-room Extended Stay America and the 120-room Marriott Courtyard in Newbury Park will cater to business travelers. Extended Stay, which according to the company is America’s fastest growing hotel chain, found its niche by offering fewer amenities and lower prices.


"We are built for the value-conscious business traveler who doesn’t want to pay for the room service, who doesn’t want to pay for the marble lobbies, who doesn’t want to pay for the bars and the restaurants," said Allison Hall, a spokeswoman for Extended Stay. "Our hotels don’t have that and that’s one way that we save money for our guests."


The average business traveler will stay for two weeks and pay anywhere from $249 a week in the less desirable markets to more than $500 in a community such as Santa Barbara.


Extended Stay will buy their own parcel on Selleck’s 10-acre development site and break ground this fall. Selleck said he’s still waiting to finalize the deal with Marriott.


"Marriot is still very interested in the marketplace, but after Sept. 11 they have decided as a corporate policy not to move forward with their own corporate operated hotels so they have encouraged us to work with franchisees.


"We are certainly negotiating with those people," he said.


Business prospects along the 101 Freeway technology corridor have been strong enough to entice many of the nation’s major hotel chains.


Also looking for a home in Thousand Oaks, according to a company official, is Hilton’s upscale Homewood Suites, an extended stay hotel with parquet floors, granite counters, china and silver.


In June, a 142-room Hilton Garden Inn catering to upper-end business travelers opened in Calabasas. "We started a little slow, but now we’re picking up," said Grace Castillo, general manager.


A 90-room Hampton Inns and Suites, Hilton’s mid-priced product, is scheduled to open Sept. 10 in Agoura Hills.


The new hotels will bring the promise of additional revenue to the cities in which they’re located. Agoura Hills officials expect to reap $350,000 a year in transient occupancy taxes from the Hampton.


The Agoura Hills Renaissance Hotel, a Marriott brand, is on track to provide the city with nearly $1 million a year in bed taxes.


While a recently completed $6 million renovation at the Renaissance didn’t add more rooms, it did give the hotel extra panache to compete with the Hiltons and the Hyatts.


"We felt the hotel was missing the boat in terms of quality of product," said Dan Monahan, the Renaissance general manager. "There’s a segment of the business out there that we could not reach with the product we had. With the renovation we’ve had, we took the hotel the next level."


Now, said Monahan, "We’re sold out any given Tuesday or Wednesday night, which is pretty much peak nights anywhere in the country for hotels. The really good news is we’ve developed our weekend business as well."


Occupancy at the Renaissance has remained at least "even" with last year, Monahan said. The news is positive considering the industry’s overall downward trend.


According to numbers from Smith Travel Research, hotel occupancy in the Los Angeles market stood at 64 percent for the first five months of this year, down 9 percent vs. the same period last year. Revenue per available room, an important industry marker, dropped 11 percent to $62.


The figures paint a far different picture in the Bay Area. Occupancy through May fell 16 points to 57 percent, while room revenue fell 30 percent to $73.


"Especially in San Francisco and San Jose, those market were just way, way inflated," said Bobby Bowers, Smith vice president.


While Hilton Hotels saw its net income in the second quarter of this year fall by 12 percent, the company says business in Southern California has generally been good. Castillo expects the Calabasas Hilton to average 75 percent occupancy in its first full year.


"The San Diego, Orange, Los Angeles and Ventura County markets are by far stronger than the Central and Northern California markets," said Greg Francois, Hilton’s vice president for western regional franchise development.


Hilton plans to build a seven-story, 161-room Hilton Garden Inn later this year in Oxnard and a 115-room Hampton Inns and Suites in Camarillo.


Industry experts said the hotels that are performing the best in the post-9-11 environment are those in suburban markets, such as Conejo Valley-Las Virgenes, with less exposure to the slumping downtown convention centers.


"That seems to be the kind of hotel that is thriving along this 101 corridor where you have so many businesses that are expanding and doing well," Selleck said. "The business traveler needs accommodations."


One project plans to cater not only to the weary business traveler, but also to the person just looking for a weekend getaway.


Located across the street from the Dole Food Company headquarters in Westlake Village, a proposed 253-room independent hotel will have not only banquet facilities and meeting rooms, but also a separate building that would offer 32 spa suites and a year-round pool covered by a retractable glass roof.


The hotel builder is Castle and Cooke Commercial of Los Angeles, a real estate development company owned by David Murdoch, the Dole CEO.


The developer scrapped earlier plans to build new office buildings at the site.


"I think Castle and Cooke saw that building more office on spec just didn’t look that good down the road," said Robert Theobold, the Westlake Village planning director.


Hotel construction is the best way to go right now, developers seem to think.



Leave a Reply

Your email address will not be published. Required fields are marked *