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Thursday, Mar 28, 2024

New Owners Expected to Boost Chinese Tourism Locally

The purchase of the Sheraton Universal Hotel by a Chinese real estate development company is expected to bring a further boost to Chinese tourism locally – a business that increased exponentially in the past year. The $90 million purchase by Shenzhen New World Co., Ltd., of the landmark hotel was completed on Jan. 5, representing the company’s second venture into the United States. In March, the company also purchased the Marriott Downtown Los Angeles hotel for $150 million. It was the company’s trust in the recovery of the U.S. economy, as well as the Sheraton Universal’s location in a major tourism hub, that led to the purchase, Shenzhen New World Co. Chairman Wei Huang announced at Shenzhen’s acquisition ceremony. “I have strong confidence in this area because our hotel is located in the hub of (Universal Studios Hollywood), which attracts millions of tourists every year,” Huang said through a translator. “Here is also the capital of the world film studios.” He added that he also has confidence in the “bright future” of the United States’ economy and in China-U.S. relationships, and he touted plans to bring more Chinese travelers to the hotel. The Sheraton Universal has had several owners in recent years. It was bought by Lowe Enterprises, a Brentwood-based real estate investment and development company, in January 2007. Lowe Enterprises spent about $25 million to do a major renovation of the facility, upgrading its guest rooms and lobby areas. However, financial troubles led the hotel to enter into receivership in December 2009, with Rim Hospitality managing the site. Under the new buyer, Rim Hospitality will continue to provide management services. With the new step toward stability for the hotel, business and tourism leaders are calling the purchase a boost to the tourism industry. “The 21-story Sheraton hotel has become an icon on the city landscape and is certainly a landmark for visitors who are traveling on their way to Universal Studios,” said Patti MacJennet, LA Inc.’s senior vice president of marketing, who added that the theme park is the city’s number-one attraction and a magnet for international travelers. LA Inc., or The Los Angeles Convention and Visitors Bureau, recently announced that 2010 was a positive year for Los Angeles tourism, with 8 percent more overnight visitors than in 2009. International travel to the city increased by 20.7 percent and Chinese travel increased by nearly 80 percent. Universal Studios collaboration Thomas See, vice president of sales for Universal Studios Hollywood, said officials at the amusement park are looking forward to collaborating with the new hotel owner, especially since Chinese tourism has been increasing by double-digit percentages at the park in recent years. “The Chinese market is so very important to Universal Studios,” See said. “We definitely believe throughout the next five to 10 years, it’s going to grow exponentially. Having a property (nearby) that is owned in principal by a Chinese owner will have increased marketing opportunities within China.” Over the past couple of years, the company has started providing its sales brochures, maps and other sales material in five other languages, including Chinese. The park has also started offering park tours in Chinese on a daily basis due to increased demand. Before that, the only other daily non-English tours were offered in Spanish, See said. See said one thing he would like to see local hotels do in the future is try to attract a large tour group of Chinese travelers visiting Southern California. Last year a group of 13,000 visitors from the Chinese company Amway toured the region over about a month and a half with stops at Universal Studios Hollywood. However, the group chose to stay at a hotel in Anaheim instead of the immediate area, See said. Corporate business See said he is also looking forward to working with the hotel on continuing to attract more corporate travelers. “It’s a solid business hotel,” he said. “(We want to) definitely go after the corporate meeting business as well as leisure business.” Shenzhen New World plans to spend about $5 million renovating the Sheraton Universal’s pool and corporate meeting rooms, which are expected to be completed by summer, Rim Hospitality and Shenzhen New World officials said. The meeting room renovations will likely include changes such as improvements to the carpet, walls, lighting and furniture. “We’re going to have a lot of (public relations) events so we can get people from the local business community into the hotel so they can see how beautiful it is and get more corporate business, and even more social events,” said Matt Engels, vice president of operations at Rim Hospitality. Jessica Yasukochi, vice president of the Valley Industry and Commerce Association, said the hotel has always been business-friendly, but that it became more attractive as a business meeting site after it completed its major renovations. “They’re rooms are great, they have the space, and they’re willing to work with you,” said Yasukochi, who organizes multiple VICA events a year at the hotel. “I hope the new people that come in don’t change that aspect of it because if it gets less business friendly or more expensive, we’d have to start looking at other venues.” Buyer interest Bruce Baltin, senior vice president of Colliers PKF Consulting USA, who appraised the hotel for the lender, said the site generated a lot of interest once it was placed on the market. “There was a lot of activity and a lot of buyers looking at this hotel,” he said. “Frankly, it’s a high-quality hotel in a good location in a strong market.” Baltin acknowledged that the hotel had its trouble in the past, but he added that the trouble was largely due to the economy. “With many hotels, it was just bought at the wrong time,” he said. “The basis was kind of lowered. Now that basis has been reset to a level that is reasonable in today’s market.” In 2010, hotel room revenues in Los Angeles County increased by about 7 percent and occupancy rates increased by about 10 percent, Baltin said. He added that room revenues are expected to increase by about 8 percent in 2011, with occupancy rates increasing by about 2 percent.

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