Small West Hollywood hotels draw cash.

THE boutique-ization of West Hollywood continues.

More than $30 million has been invested in buying and renovating two of the city's sub-150 room hotels as part of an ongoing revitalization of the wider hotel market.

LaSalle Hotel Properties, a Bethesda, Md.-based real estate investment trust, has acquired the 108-room Grafton on Sunset for $25.5 million, and Kor Hotel Group, which acquired the Summerfield Suites by Wyndham in 2002, has received a $14 million recapitalization, a portion of which will fund a $5.3 million renovation and repositioning of the 112-room hotel.

Bruce Baltin, senior vice president of PKF Consulting in Los Angeles, said the investments reflect what's happening in other parts of the country.

"West Hollywood is a healthy hotel market and it reflects a trend that a lot of companies want to invest in the boutique style hotels," he said.

The Grafton will continue to be managed by Encino-based Outrigger Lodging Services, which also manages LaSalle's 133-room Le Montrose Suite Hotel in West Hollywood.

The Summerfield Suites, on Westmount Drive, will be renamed the Chamberlain on March 1. While original plans called for a $1.8 million renovation, the amount was upped to make the hotel look and feel more like Kor's other Los Angeles County boutique hotels, the Viceroy in Santa Monica and Avalon Hotel and Maison 140 in Beverly Hills.

Kor is doing away with Summerfield's free phone calls and buffet breakfasts in exchange for the addition of an as-yet-unnamed bar/restaurant. A Jacuzzi will be removed to make way for cabanas and new furniture on the rooftop pool, which will be resurfaced. Prices will be raised.

Renovations to the lobby and guest rooms, which are already under way, will be completed by March 1, with the remainder of the hotel slated for completion by mid-March.

Real estate investment bankers Sonnenblick-Eiclmer Co. arranged for $14 million in non-recourse interim financing, part of which is being used for the renovation and repositioning.

"Everything is changing," said Tom Santora, vice president of sales and marketing for Kor Hotel Group. Because of the repositioning, Santora said it was likely only 10 percent to 20 percent of the hotel's current customer base would be retained.

While current room prices range from $109 to $139, new pricing will start at $169.

The average daily room rate in West Hollywood for the first 11 months of 2004 was $162.10, up 6.8 percent compared with the like period in 2003, according to PKF Consulting. Occupancy rates also rose 6.8 percent in that period to 80.2 percent, among the highest in L.A. County.

Staff reporter Rebecca Flass can be reached at [phone], ext. 230, or at [e-mail].