A Little Bit Too Roomy?

R.D. Olson Development has started construction on a 170-room hotel in Burbank, raising the question: can the city handle yet another new lodging? The Irvine developer is building a $44 million SpringHill Suites by Marriott at South San Fernando Boulevard and East Santa Anita Avenue – just 400 feet from a planned 210-room Hilton Garden Inn by FPG Development Group of Palm Beach, Fla. The construction comes as the city’s Media District took some big hits this month with the departure of “The Tonight Show” and KNBC-TV Channel 4’s operations to other locales. But the two hotel projects sailed through the approval process last year and city officials, the developer and industry insiders are convinced the city can absorb the space. “I think like anything else, in the short run there will be a concern over competition. But the big picture is about Burbank becoming a destination and attraction. If you take a long term business outlook, it will be a good thing for all of us,” said Tom Whalen, general manager of Hotel Amarano, an upscale boutique near Warner Bros. Studios, who is chairman of the city’s hospitality association. One reason the city is so aggressive is that it’s set to launch a large-scale advertising campaign to help attract more travelers. The hospitality association got a funding boost with the 2011 creation of a tourism business improvement district. The district, which is comprised of 15 hotels and funded by a 1 percent bed tax, brought in $690,000 in its last fiscal year ended Sept. 30, well more than the $408,000 in its first year when it was just getting off the ground. The city’s 18 hotels and roughly 2,250 rooms have what is considered a healthy occupancy rate of 77 percent, though the new hotels will surely bring the rate down at least temporarily. Still, Bob Olson, founder and chief executive of R.D. Olson, said he is very optimistic his firm will do quite well with its SpringHill Suites project, which he expects to open next spring. “The demand is there. The city has a great business community and tourism continues to come,” Olson said. “This is the perfect place to build.” Attractions The five-story, 102,000-square-foot SpringHill Suites will be a mix of 88 king-bed and 82 double-queen bed suites, all with full-sized desks, free Wi-Fi, a small living room area, kitchenette with microwave and more. Olson said the city has a strong reputation for business travelers, mostly from the entertainment industry, and the all-suite hotel provides the amenities non-suite lodging may lack. Room rates will be in-line with the market at around $200 a night. But it’s been up and down in the city these days with the loss of “The Tonight Show” as new host Jimmy Fallon takes over from New York and KNBC settles into new broadcast facilities in Universal City. Both were decades old tenants of the NBC complex on Alameda Avenue. (See article page one.) However, Burbank may be able to prosper from some changes at Universal Studios. In September, NBCUniversal demolished the 50-year-old Gibson Amphitheatre, which will be replaced with a “Wizarding World of Harry Potter” land to open next year at its Universal Studios theme park. “The number one activity for a hotel guest is spending money,” Olson said. “They stay at a hotel, but then go shopping and eating in town.” And hospitality consultant Bruce Baltin, a senior vice president at PKF Consulting USA in Los Angeles, said the themed land will help the city’s hospitality business. “It’s going to have a really good draw,” he said. “There’s so much money going into Universal and Hollywood and it will spur more tourism in Burbank.” Baltin added that he considers any market with an occupancy rate north of 70 percent as “ready for more development,” and though it may take a little time, Burbank will be able to absorb the added bed count. Mary Hamzoian, Burbank’s economic development manager, said the city will kick off a large-scale marketing campaign for tourism later this year. Paid for by the hospitality association, it will feature ads in in-flight magazines on major airliners, Internet travel sites and California destination magazines. “We’re really trying to push for more travel,” she said. “Burbank is so close to Universal and Hollywood, so this is the perfect place to stay.” The SpringHill Suites is not Olson’s first hotel in Burbank. The developer also owns and operates the Residence Inn by Marriott about a third of a mile away on South First Street. The company builds multifamily, office and retail developments, but it’s clearly seeing a growing opportunity in the hospitality industry, as the SpringHill Suites will be Olson’s eighth hotel development in the last three years, including coming projects in Glendale, Irvine and Pasadena. The firm was also involved in the transformation of the Anza Hotel, an upscale boutique in Calabasas, which was previously a Country Inn & Suites. Ripple effect Most of the Burbank’s hotel offerings, which are a mix of large chains, boutiques and budget hotels, are centered near Bob Hope Airport or along more major thoroughfares. The SpringHill Suites and Hilton Garden Inn are located in what is called the “South San Fernando Corridor,” a formerly industrial strip that has been upgraded over the last few years with antique streetlights, landscaping and benches. Some new residences and businesses also have come into the area, including the Burbank Senior Artists Colony built in 2007, a retirement home where seniors can write, draw, act and sing. And then there’s Ikea, which is planning to build the largest store in the United States, a 470,000-square-foot outlet at 805 S. San Fernando Blvd. on the corridor. It is tentatively set to open in 2016. Hamzoian thinks the new hotel construction will force some of the older properties to upgrade. She noted one of the city’s largest hotels, the 485-room Holiday Inn Burbank Media Center, completed a $15 million renovation last year. “The new spots will definitely get more attention,” Hamzoian said. “But this will make other hotels step their game up. And that’s good for everybody.” Olson was aware that competition for room nights could be stiff, so he stepped up the hotel’s design. He brought in Awbrey Cook McGill Architects of San Diego to design the hotel, which is meant to look like an antique film camera as homage to the city. Olson also had considered opening the hotel without the Marriott International Inc. of Bethesda, Md. flag. He did some research and decided having a strong and familiar name attached to his product was the best play. “Travelers like to use their awards and we have a good relationship with them,” he said. “After looking at the economics and the demographics, branded is the right way to go.”