Beset by multiple woes, New Otani owner considers sale.

MORE than most downtown hotels, the 434-room New Otani Hotel & Garden has struggled, caught in a vice of declining business travel, limited convention business, labor troubles and the steep falloff in travel by its core constituency: Japanese on package tours.

Hotel management claims an occupancy rate of about 50 percent, on par with the downtown market in its price range. But industry trackers believe the real number is below 40 percent.

Now, the market is rife with rumors that the property, at Second and Los Angeles streets, is on the market.

Takashi Ito, president of hotel owner East West Development Corp., a division of Japanese construction conglomerate Kajima Corp., denied the property was being marketed but did not preclude selling it.

"Disposition of the project, it's always an option," he said. "When you make business decisions, you are always seeking an opportunity to maximize the value of the hotel. We have no current intention to sell the hotel but that depends on the offer."

Though Ito declined to estimate the hotel's value, brokers have placed it at between $30 million and $35 million.

Last year a Kajima subsidiary sold the Long Beach World Trade Center and an adjoining Hilton Hotel for $100 million. Last month, Kajima sold a 95,000-square-foot office building at 901 Corporate Center Drive in Monterey Park, according to a source familiar with the deal.

Ito called those sales coincidental and said they were not an indication Kajima is looking to sell the New Otani, its last L.A. County holding.

"Those were strictly business decisions," he said. "They were based solely on favorable market conditions."

Japanese tour groups consistently have made up between 20 percent to a third of the hotel's annual business, but Japanese travel to Los Angeles is estimated to be less than half what it was in 1997 when a peak of 848,000 Japanese visited.

"Japanese tourists are very concerned about their security," Ito said. "In the future they will come back but not immediately."

The property is also the target of an AFL-CIO-sponsored boycott stemming from a 1997 confrontation with the Hotel Employees and Restaurant Employees Local 11.

Restaurants Gain Weight

Locals appear to be loosening their purse strings at area restaurants.

MasterCard International Inc. reported that the average amount charged by its card-holders at L.A. eateries in the first six months of the year increased 9 percent over the like period a year earlier.

But the increase, to $47.08 from $42.88, comes not because of higher prices but a willingness of customers to order more.

Restaurateurs said that customers, though dining out less, have been more likely to buy an appetizer or an extra bottle of wine than they were a year ago.

"We may not have as many people coming through the door, but our sales are just as high as last year," said Caroline Styne, part owner of A.O.C. and Lucques. "There' s something about going out and having a good time that lets you get away from the feeling of being stuck in a recession."

Many restaurateurs attributed the gain to several high-profile restaurant openings, which they believe has renewed an interest in dinning out.

"The culture is changing and improving and there are more people who want to experience good food and drink better wine," said David Rosoff, managing partner of Opaline.

Pearl After the Rough

From drag queen revue to posh dinner club, the 7,500 square foot restaurant at 655 Robertson Blvd. in West Hollywood has a long history of short-lived tenants.

That's a pattern the owners of Pearl hope to break with their new nightclub/restaurant. They opened their Asian-influenced dinner club in the space last week.

California Restaurant Authority Inc., operated by Portland, Ore.-based partners Pat Marlton and Clark Goodman, bought the lease out in June after convicted con artist Edward Lindor last year ran the dinner club Moomba, which he renamed Dorcia, into the ground.

"We've retooled the whole place," said General Manager Steve Marlton. "It looks a million times better."

Marlton, whose brother is a partner in the restaurant, estimated the new owners spent between $900,000 and $1 million to acquire the lease and liquor license from the bankruptcy court, renovating the interior and upgrading the entertainment system.

Before Moomba, the building was the home of drag queen cabaret and restaurant Luna Park, owned by Jean-Pierre Boccara, who has been hired to remodel the interiors.

Marlton said he recruited Joseph Anderson, executive chef at City Grill in Portland, and Cody Diegle, formerly of Patina and most recently Tangerine, as co-executive chefs.

Staff reporter Andy Fixmer can be reached by phone at [phone], ext. 263, or by email at [e-mail].