Hotels on the Horizon

Although tourism is at an all-time high in the Los Angeles market, the San Fernando Valley region finds itself playing catch-up to get a piece of that action. While the Valley boasts several main attractions for visitors – theme parks, universities and of course businesses – it lacks the same density of hotels as downtown L.A. or the area around Los Angeles International Airport. But developers have plans afoot to balance supply and demand. From steel towers in Universal City to boutique hotels in Burbank and suburban lodges in Ventura County, the region has entered a period of intense hotel construction. “The hotel market performance is strong as corporate earnings are good for commercial hotel guests, and disposable incomes are high for leisure travel,” said Jeff Lugosi, managing director of hotels at brokerage CBRE Group. “As a result, developers and lenders now seek hospitality construction.” Hotel data firm STR reported a U.S. occupancy rate of nearly 66 percent last year, the highest since the company started tracking the metric. The company also reported 588,645 hotel rooms under construction or in the planning phase nationally. Massive market In 2017, Los Angeles had a record year for tourism with 48.3 million visitors, according to the Los Angeles Tourism & Convention Board. In its report on the previous year, the organization named Universal Studios Hollywood as the region’s top attraction. Hotel builders want a piece of the Universal City crowd. Hillcrest Real Estate LLC, filed paperwork Jan. 10 with the city of Los Angeles to move forward with plans to build an adjacent tower, of which a resurgent Universal Studios, now home to the popular The Wizarding World of Harry Potter attraction, would become the prime beneficiary. The L.A. real estate developer plans to construct a 15-story, 365-room addition to its venerable, 1984-constructed 495-suite Hilton Los Angeles Universal City hotel, which stands 24 stories tall on NBCUniversal property. Budgeted at over $100 million, the Hilton’s new wing aims to accommodate guests in style with breathtaking views and a fine-dining steakhouse. The plans devote 8,000 square feet to restaurants and 10,120 square feet toward a spa. Hillcrest aims to break ground in 2020. Despite NBCUniversal’s objection to the proposed project’s size, Hilton Los Angeles Universal City General Manager Mark Davis, also president/CEO of Hillcrest, is pushing the project forward toward for a 2022 grand opening, in time for the Super Bowl in L.A. later that year and the Summer Olympics in 2028 “We cannot grow anymore without this expansion,” Davis told the Business Journal in January. In nearby Burbank, another development targets business travelers. Choice Hotels International, Inc. announced that Burbank will be getting a Cambria hotel. In August, the Rockville, Md.-based company signed an agreement with S3D Partner to develop its first Cambria hotel in California at 201 S. Glenoaks Blvd. Cambria is a relatively new brand for Choice that aims for the upscale business clients. Due in 2019, the six-story, 90-room Cambria Hotel Burbank will join a string of boutique Cambrias planned for downtown L.A., Glendale and Calabasas. “The Cambria Hotel Burbank property is another important component of our rapid growth on the West Coast, and, in particular, L.A.,” said Mark Shalala, vice president of development at Choice Hotels. “With lodging demand so high in the area, this property will exceed the expectations of today’s modern traveler.” Universal City and Burbank aren’t the only Valley neighborhoods looking to up the tourism ante. Last June, the Woodland Hills-Warner Center Neighborhood Council paved the way for West Palm Beach, Fla.-based FPG Development Group Inc. to create an upscale, $20-million Home 2 Suites at 5957 Variel Ave., at the corner of Oxnard Street, at Warner Center Business Park. The seven-story, 170-room hotel, which will replace a 14,000-square-foot office building, was approved after aesthetic and land usage suggestions from a trio of planning and land use management committee meetings were incorporated into the designs. Other FPG Development Group projects include the new Hilton Garden Inn, which opened in 2017 at 401 S. San Fernando Blvd. in downtown Burbank. The six-story, 210-room hotel boasts 41,525 square feet, including 1,108 square feet of flexible meeting space for events while each guest room features a refrigerator, microwave, Keurig coffeemaker and large-screen television. Perhaps its best feature is its proximity to Burbank’s airport, three major studios and 700 media-related companies. Greener valleys One of the outlier Valley projects on the horizon will address the underserved educational market. California State University – Northridge has signed a private/public partnership on the development of a 150-room, on-campus, business-class Hyatt Place hotel with restaurant and conference space, at Nordhoff Street and Matador Drive. Among its ostensible goals: to replace the aging Orange Grove Bistro/University Club. CSUN’s campus has a ready-made market of 50,000 students, faculty, staff and visitors while drawing thousands more to campus for athletic competitions and cultural events. Yet with the nearest business-class hotels more than 4 miles away from campus, university officials felt “the absence of adequate hotel facilities near CSUN limits the university’s ability to support these many events and programs that connect the university with students and their families, alumni, and the academic and business communities,” a university statement said. In November 2015, the California State University Board of Trustees approved plans to build the hotel, which will comply with campus-building aesthetics, and then presented the proposed project to CSUN. The school informed Los Angeles City Councilman Mitchell Englander and neighborhood councils. “Reaction to the proposed project has been overall positive,” said a CSUN report. “The community shares CSUN’s desire for the best possible arrangement for the university.” The hotel has already successfully passed through various school and land development review committees. The project’s current timeline is to complete an environmental impact study and schematic renderings by March, win final CSU Board of Trustees approval in May, and start construction in January 2019 for a June 2020 opening. In Chatsworth, HRI Development has proposed incorporating an 87,000-square-foot 124-room Marriott Residence Inn into The Gateway, the 8.23-acre shopping center complex planned for Lassen Street and Mason Avenue. Several existing businesses and structures will be razed to accommodate the Marriott, to be located on the lot’s northeast side and next to a Planet Fitness health club housed within a reimagined version of a 20,000-square-foot historical building originally opened in the 1950s as a Safeway supermarket. While the bulk of the planned business structures will be single-story buildings, the hotel will stand four stories. Late-2017 also saw Antelope Valley gain a new hospitality jewel when Benchmark Development and InterMountain Management opened California’s first Element by Westin hotel in Palmdale. The 123-room, midscale property – just off State Route 14 and minutes away from downtown Palmdale – proves a short ride from the Blackbird Airpark Museum and Air Force Flight Test Historical Museum. Hotel amenities include a 24-hour fitness center, 838-square-foot meeting room, and suites boasting ergonomic workspaces, energy-efficient kitchens, 50-inch flat-panel televisions and spa-inspired bathrooms. “We believe that travelers deserve more than a place to stay. They need a place to thrive,” General Manager Mauricio Flores said in a statement. Hot spot Santa Clarita Valley continues to prove itself as one of the most robust hot spots of hotel development. “We’ve had a pretty strong hotel tourism market here,” said Santa Clarita Marketing and Economic Development Manager Jason Crawford. “The city is taking a really proactive on Old Town partnership with the hotels.” Santa Clarita Valley’s long streak of hotel industry dates back to just before the Great Recession in 2007, when Embassy Suites, La Quinta and Courtyard by Marriott all opened for business. Prior to 2007, there were 1,485 rooms available in Santa Clarita Valley. Once all three hotels opened, inventory increased to 1,893, a 27 percent gain. “This was when our occupancy percentage dipped with the increased inventory, but then was absorbed and is now back at peak levels,” Crawford said. The current hotel culture appears very healthy. In Old Town Newhall, the five major hotels– Hyatt, Holiday Inn Express, Best Western, Embassy Suites and Courtyard by Marriott –participate in a BID called Santa Clarita Tourism Marketing District, which is subsidized by a 2 percent assessment on guests’ bills. Meanwhile, unincorporated Santa Clarita Valley also has a Residence by Marriott, Hilton Garden Inn, Comfort Suites, Hampton Inn and Fairfield Inn. Now on the horizon, a clutch of hotel projects approved for development which Crawford said will start to come into fruition in 2019, including a 200-suite Vista Canyon hotel; a 185-room Homewood Suites/Hampton Inn; 170-room Residence Inn/Springhill Suites, a 134-room Oliver Hotel rumored to be an Element by Westin; and Luxen, a 42-room boutique hotel in the heart of Old Town Newhall. According to Crawford, the full build-out of these approved projects will add 731 rooms to existing inventory, bringing the total room count within the city of Santa Clarita to 1,646 and 2,624 throughout Santa Clarita Valley. Ventura strong Call it the halo effect, but even economically sluggish Ventura County is seeing some major hotel-industry movements. According to the Camarillo Hotel & Tourism Association, a pair of Hiltons – an Embassy Suites and Home 2 Suites – are in the pre-construction stage near the intersection of Ventura Avenue and Las Posas Road. The association’s Adriana Huizar is particularly enthusiastic about the promised 17,000 square feet of conference space the two hotels will bring to Camarillo. Ursula Roman, brand public relations manager at Hilton, confirmed that the application for building both hotels was just received a few weeks ago. “They are currently in the application review/approval process. That process should be complete in the next 90 days,” Roman said. Even Ventura, Camarillo’s neighbor to the north, is seeing some burgeoning hotel action. Hilton is also in the early stages of developing a 156,160 square-foot hospitality building at Harbor and Figuero, walking distance from the Ventura County Fairgrounds. Not far from this prospective hotel – which is promising 160 rooms, restaurant and upper roof lounge – permits have also been issued to build a four-story, 128-room Marriott Residence Inn a short drive north off the 101 on a lot at 788 S. Seaward Ave. that has been vacant for more than 10 years. Permits for this 87,000-square-foot hotel were approved in 2015. The project is currently in the plan-check stage.