Hotel building still booms despite tourism slump.

Hotel building still booms despite tourism slump

Even though there is a slump in the tourism business in Los Angeles County, there is no recession in new hotel construction.

At least 10 major hotels are in the planning or construction phase of development and, it completed, they will add 5,600 rooms to the county's inventory of about 86,000 rooms, a 14 percent increase.

The properties include hotels in Pasadena, downtown Los Angeles and coastal areas like San Pedro and Marina del Rey. Each project has a minimum of 350 rooms.

Additional properties have been proposed for other areas of the county, which could add several hundred more rooms to the inventory, according to the Los Angeles Convention & Visitors Bureau.

"I conldn't say how many of those hotels will be built," said Saul Leonard, a national partner for leisure time industries in the Los Angeles office of Laventhol & Horwath, a national accounting firm. "Sixty days ago I would say most of them would be built soon. Right now I would be a wizard to say how many would be built. But I would bet that all of them will be built, in some form or another by some developer, over the next four or so years."

Among the proposed properties are two large hotels in downtown Los Angeles that would both the built on the east side of Figueroa Street between Seventh and Eight streets.

Both properties are now before the Community Redevelopment Agency and are undergoing environmental impact reviews, said the agency's director of operations, Steve Valenzuela.

One of the hotels would be built by Macklowe West Development Co. in Los Angeles and the other by Halekulani Co., which operates two resort hotels in Hawaii.

The Macklowe property would be a 700- room, 45-story hotel geared to business travelers and would include extensive meeting and conference facilities. Last spring the company opened a similar property in Times Square in New York.

Valenzuela said the developer wants to start construction, which would include renovation of an existing building at 818 Seventh St., a year from now.

The Halekulani property would be a four- or five-star property with almost 400 rooms, said company spokesman Ralph Jackson. Halekulani is a subsidiary of Mitsui Fudosam (USA), a real estate development company with offices in Los angeles, New York and Honolulu.

"We think there is a good market for a really top hotel downtown. Our resort hotels in Hawaii have a reputation for good service and that is what we are planning for downtown," said Jackson.

Valenzuela said both proposals are following the same timetable with possible completion in late 1993.

The largest of the proposed facilities on the CRA list would be a hotel with at least 1,200 rooms across Figueroa Street from the Los Angeles Convention Center, which is about to be expanded to more than double its current size.

Proposals from developers interested in the Convention Center expansion are due at the CRA Sept. 8.

Other planned hotels are two properties in the Bunker Hill region -- a 470-room Inter-Continental hotel at California Plaza that recently began construction, and a 350-room Ritz Carlton across from the Dorothy Chandler Pavilion at First and Hope streets. The Ritz Carlton is now submitting environmental studies to the CRA.

In addition, two major projects in different stages of development are planned in Little Tokyo by All Nippon Airways, and a hotel is proposed for the site of the Brockman building downtown at Seventh Street and Grand Avenue.

The planned construction comes on top of 14 new hotels with a minimum of 150 rooms each that were completed in Los Angeles County between March 1988 and January 1990, and five recently renovated properties. The renovations included some of the biggest properties in the county.

The poposals also come at a time when tourism is slumping. Hotel occupancy rates are sliding and are expected to continue in that direction for some time, according to industry experts.

"A lot of the construction, especially downtown, has to be in anticipation of the (expansion) of the Convention Center," said Bruce Baltin, a partner in the Los Angeles office of Pannell Kerr Forster, a national accounting firm. "Many developers just want to get something in the pipeline just so they can move when it looks like things will be getting better. I would anticipate that some of these projects will be slowed down or speeded up as the Convention Center is (expanded)," he said.

Laventhol & Horwath's Leonard said developers would only be planning the hotels if they saw economic strength in the region.