Booking Downtown

By Blair Clarkson
Staff Writer

April 5 -- Without the conference rooms and meeting spaces offered by larger hotels, the Hotel Carmel, on the corner of 2nd and Broadway, relies on its location in “the heart of Downtown” to attract visitors.

One block from “the world renowned Third Street Promenade,” the 102-room hotel is just a stroll away from “the place to relax and ‘hang out’ in LA,” according to the hotel’s Web site.

“All I’m selling is a good clean room in a great location at an affordable price,” said Sherry Kellogg, the Carmel’s general manager. “I think we have a niche for the Downtown area.

“Our guests want to explore the sites of Santa Monica and have easy access to public transportation,” she said. “Location has definitely helped us.”

The Carmel is one of seven Downtown hotels and a youth hostel that capitalize on the Promenade’s three blocks of specialty boutiques, retail shops, eclectic restaurants, theaters, street performers, pubs and buses that connect visitors to the rest of LA.

“It’s definitely a big plus to be in this location,” said Paul Hortobagyi, general manager of the Georgian Hotel on Ocean Avenue.

“Everything is within walking distance. People can walk down to the mall or the Promenade. And Santa Monica is well known (to my guests) for its fantastic restaurants.”

In a city that relies heavily on tourist dollars, hotels pump up the Bayside economy by providing a steady stream of customers who need only turn the corner to spend their money, helping to fill the City’s coffers with bed and sales taxes.

Hotels “provide a good source of revenue for the City,” said City Council member Ken Genser, “and they also provide an additional population of people who are here to spend money. They’re good for the economy.”

More than 3.8 million people visit Santa Monica each year for pleasure, vacation or business, spending $788 million annually, according to the Santa Monica Convention and Visitors Bureau. These visitors earn the City some $20 million in tax revenues and help support nearly 11,500 jobs.

Much of that money is spent in the Bayside District.

“We know that the vast majority of people who stay in the hotels in Santa Monica visit the Downtown area and Third Street Promenade,” said Kathleen Rawson, executive director of the Bayside District Corporation. “When occupancy is high we have a very good showing.

“Certainly we rely on Santa Monicans and regional visitors,” she continued. “They make up the bulk of our business in terms of bodies. But the tourists’ spending is significantly higher. Those dollars going into the Downtown shops and restaurants are very important.”

Even with the recent economic slowdown, the City’s hotel occupancy rate in its 3,500 rooms has come back strong at 73 percent, according to CVB figures.

“The economy is improving,” said Chamber of Commerce Chair Kathy Dodson. “We’re definitely seeing an improvement over the last couple of years in terms of hotel occupancy and rates stabilizing.

“It’s a critical part of the economy,” Dodson said. “When tourism dries up, it hurts all businesses in Santa Monica. Not only does Santa Monica get revenue from the transient occupancy tax, but also from sales tax. Having a strong hotel sector is very important to this city.”

And it’s particularly vital to the Downtown, where plans to add hotel rooms are in the works. Local business owners welcome the news that the Fairmont Miramar hopes to expand and that a local developer plans to turn the old clock tower on Santa Monica Boulevard into a hotel.

“The Promenade area is very dependent on tourist business,” said Linda Tsukamoto, who works at Puzzle Zoo on the Promenade. “The more hotels there are in the area, the better the tourist business. Any time someone does revamping or when new hotels come into the area, I don’t think that’s ever a bad thing.”

“We certainly get a lot of business from hotels,” agreed West Hooker, manager of Locanda Del Lago, a restaurant on the Promenade. “It’s part of the supply of customers in Santa Monica. If you get more hotels, you’ll probably see more restaurants open because of the larger supply of customers.”

Hooker estimates that during summer months his restaurant gets up to 30 percent of its business from hotel guests and sees an additional boost when conventions or seminars sell out hotels.

“Our business is pretty much synchronized with the occupancy of the hotels around here,” he said. “Any time the hotels are working at max occupancy, we definitely have higher sales.”

For Laurel Rosen, marketing manager for The Lobster Restaurant at the foot of the pier, being within walking distance of the Downtown district and a bevy of local hotels has had a huge impact on her business.

“We probably get thousands of people every year coming in to our restaurant who are staying at area hotels,” she said. “Easily 10,000 a year that predominantly come from hotels around us.

“We get a lot of walk-in business and an enormous amount of group business” from hotels, she added. “It’s very significant to us.”

Even current hotels owners agree that adding more hotels to the Downtown area is a positive, perhaps necessary, step for the city.

“I wish the best for whoever wants to invest in new hotels,” said Hortobagyi, who is a member of the CVB board. “I have no problem with competition. Competition is good.”

“As long as the demand is there that we’ve had since the beginning of this year, it would not hurt,” said Francois Khoury, manager of the Doubletree Guest Suites, just south of Downtown on 4th Street. “I just hope the timing is correct.”

While being Downtown is now seen as a huge advantage to many hotel managers who sell the Promenade and other shopping and dining destinations to their guests, 14 years ago the desired location to build hotels was on the beach.

That all changed in 1990 when Santa Monica voters passed Proposition S, effectively banning all hotel construction west of Ocean Avenue. The measure was a reaction to developer Michael McCarty’s plan to erect an upscale luxury hotel at 415 PCH, the site of the old Marion Davies estate controlled by the City.

“The public was outraged by this,” said Council member Genser. “People didn’t want to see a luxury hotel on the beach on public land.”

Without the beachfront as an option, hotel operators are looking to the Downtown, where there are currently two proposed plans being drafted to develop new hotel rooms. Many City officials support the plans.

“Hotels generate less traffic in peak hours than commercial offices do,” said Genser. “In general I think more hotels would be fine.

“Some people say we’re turning too touristy, but they have to realize that if we want to give money to schools and all these services people want in the City, we’ve got to pay for them somehow, and hotels are a pretty good way.”

The Fairmont Miramar Hotel has held discussions with the Planning Commission and City Council regarding a plan to redevelop its hotel site, but has yet to make a formal submission, according to Sarah Lejeune with the Planning Department.

Initially, City planners and council members voiced concerns in December 2002 over the type of housing being considered by the Miramar and the height of a proposed tower on the site.

“Nobody particularly liked the concept they had,” said Genser.

A year later, after receiving a substantially altered construction plan, the council directed staff to begin negotiating a development agreement with the Miramar.

The accepted proposal could add more hotel rooms, expand the ballroom and other function rooms, create assisted living or affordable housing units, add retail uses and provide public parking in an underground garage, according to a staff report.

The council also emphasized the Miramar’s need to protect views and engage area residents in the design process.

The second proposed hotel development is planned for the clock tower building at 225 Santa Monica Boulevard. Although there has been no formal application for the project, the architect has held conceptual discussions with the City.

“Right now we’re designing it,” said Tom Landau, whose firm, the Landau Partnership, did the rehab work on the building to convert it to office space. “We’re getting ready to resubmit our plans to the City for a change of use.

“We’ve had preliminary meetings with them and they are very happy with what we’re doing,” Landau said. “We’re trying to go as fast as we can, but to turn that building into a hotel takes some doing.”

Bayside officials look forward to the new hotel rooms bringing even more tourist dollars Downtown.

“It would be terrific, because it’s like having residents in the Downtown,” Rawson said. “It creates a very nice pedestrian flow and gets people on the street. That’s good for business, and it’s good for enlivening the area.”