Proposed Beverly Hills Hotel Attracting Heated Competition

BEVERLY HILLS, CA— In a town where even the zip code is famous, several luxury hotel operators are battling to be the first new high-end hotel to open in this glitzy location in more than a decade. Consisting of 5.9 square miles of wealth and envy, Beverly Hills is set to add its 15th hotel within the city limits, located on Cañon Drive— two blocks from retail Mecca, Rodeo Drive. Set to be built on a city-owned lot, the proposed 220-room property is being developed by Phoenix-based Athens Group, and will represent the first new-build hotel to enter the market since The Peninsula in the early 1990s. A flag for the new hotel has yet to be chosen. However, according to a recent Reuters report, almost every major luxury operator has thrown its hat into the ring. Currently, the brands in the running are: Mandarin Oriental; Rosewood; Hilton’s Conrad brand; and Marriott International’s Ritz-Carlton, Bulgari, and J.W. Marriott flags, Reuters said. So, why the competition? In short, it’s the “location, location, location.” In addition to its ritzy residents, Beverly Hills is also famous for its barriers to entry. This small municipality outside Los Angeles can only occupy so many hotels and business while still maintaining it’s posh reputation. “It’s not that its difficult to build here, it’s that it’s popular to build here,” said Jeb Baird, director of the Beverly Hills Conference & Visitors Bureau. “There’s a lot of interest, which creates a lot of concerns. It’s incumbent on the city to make sure that each project that gets built is right.” Given the city’s reputation for excellence, nearly half of its 2, 034 hotel rooms are luxury accommodations, said Baird adding that the city has five “principle” properties: the Regent Beverly Wilshire; the Beverly Hilton; and its three five-diamond, five-star hotels— The Peninsula, the Beverly Hills Hotel, and the Raffles L’Ermitage. “We’re the only city with three, five-star, five diamond hotels. Not even New York has that,” he stated. In addition, he noted that while new construction hotel projects in Beverly Hills are limited, conversions and renovations are common— referencing the acquisition of the L’Ermitage Beverly Hills by Raffles International in 2000. “We have a lot of hotel activity, just not ground-up [construction],” he remarked. With the high-profile address also comes high price tags. Despite the downturn in the economy, Beverly Hills hotels are still commanding an ADR of more than $250 per night, which is more than $100 more than any other Southern California market, according to Baird. “I think the fact that our ADR hasn’t slipped much demonstrates the staying power of Beverly Hills,” he said. He added that occupancy is also starting to come back, averaging 67% in March, which is still off from its year 2000 average of 75%. “We’re on our way back up…We feel good about the future and we look forward to more international travelers returning,” he said.