Ambassador Hotel Struggling to Survive : Search Is On for a Buyer of Mid-Wilshire Property With Colorful History

Times Staff Writer

It is the hotel that hosted the movie industry's salad days, where the stars mixed with business tycoons, politicians and worldly blue bloods. Royalty from Africa, queens from Europe and Presidents from Franklin D. Roosevelt through Lyndon B. Johnson all stayed at the Ambassador Hotel when they were in Los Angeles.

Marion Davies once rode a horse through the Ambassador lobby to amuse her lover, William Randolph Hearst. Marilyn Monroe attended class in the hotel at the Emmaline Snively Blue Book Modeling Agency. Robert F. Kennedy was assassinated there following a political rally.

Though it has been many years since the Ambassador has had this kind of notoriety, the grande dame of Los Angeles-area inns is temporarily back in the limelight: once again, it is for sale.

At stake this time, however, is survival of the 65-year-old Los Angeles institution.

Though in decline for years and losing money, the Ambassador is situated on a 23.5-acre parcel of land that real estate promoters see as one of the last open spaces in urban Los Angeles available for large-scale office building and retail development. (The hotel occupies only about one-third of the grounds.)

Whether the Ambassador itself can make a comeback depends on whether new owners are willing to invest the millions of dollars needed to bring it to first-rate standards, hotel consultants say.

Chicago businessman Lester Crown is making no promises that the hotel will be spared the wrecker's ball. "I think that will be the determination of the purchaser," said Crown, who is supervising the sale for the Schine family, which has owned the hotel since 1946.

Crown is overseeing the sale as part of the gradual liquidation of the theater and hotel empire of J. Myer Schine, who died in 1971. Crown, 60, is married to one of Schine's children and himself runs a family empire that, according to a recent Business Week magazine estimate, is probably worth at least $1.5 billion.

In keeping with the Ambassador's unorthodox history, announcement of the sale was made not by the hotel or the Schines but by Los Angeles City Councilman John Ferraro. The councilman is pushing hard, with the support of historical groups, to keep the hotel alive. His district includes the mid-Wilshire area, where the hotel is located. The hotel, set well back from Wilshire Boulevard, is surrounded by spacious gardens that are a throwback to more leisurely days.

When the hotel opened in 1921, it was so far outside town that employees had to walk seven blocks from the end of the trolley line to get to work.

Today, the 510-room complex is ringed by high-rises that have left the hotel in an architectural time-warp. Though the present owners won't reveal their asking price, consultants estimate that the property is probably worth between $50 million and $100 million.

Built for about $5 million, the Ambassador opened as part of a chain that included like-named hotels in Atlantic City, N.J., New York and Santa Barbara. Its opening was a major social event.

Made Music Together

According to one newspaper account, "never has a society event . . . seen so many dinner parties gathered under one roof, and probably never before have so many orchestras been assembled together in one room, each carrying the same melody in complete harmony."

The hotel soon became the gathering spot for the rich and famous.

"If Hollywood was the dream and workshop of the motion picture explosion, the Ambassador Hotel was the bedroom and living room of the industry," Margaret Tante Burk wrote in her book "Are The Stars Out Tonight?"

"Back then," journalist Adela Rogers St. Johns was quoted as saying in Burk's book, "the film stars and producers didn't have the large and beautiful homes they have today . . . nor did they know how to entertain in the grand, elegant and aristocratic manner that the hotel could provide.

"So this is where we all came to be seen, to be coddled, amused and entertained. And this is where business, society and film people met. Formerly film and theatrical people had not been 'accepted' by the social elect . . . but hotel functions brought them together."

Special Niche

The Ambassador occupies a special niche for older Angelenos, who are apt to wax nostalgic at the mention of the hotel and its once-famous nightclub, the Cocoanut Grove. The Grove, now closed, was the in spot of the '20s, '30s and '40s for dancing and ogling famous people, say those who grew up in that era.

The Grove was " the place to squire your very best girl," one reader wrote The Times a few years ago. "As I look back now, decked out in my rented tux and accompanied by my current lovely, dancing among the palms to Ted Fiorito's orchestra (Muzzy Marcelino, vocalist), I doubt if my social status ever reached a higher peak."

The Ambassador's colorful social history was well-chronicled by Burk, who has worked as a public relations consultant for the hotel since 1968. The title of the book--"Are the Stars Out Tonight?"--was the familiar question that nightclub patrons always asked at the Grove.

Front-Page News

In its heyday, the Ambassador was bathed in attention from a rapt press. Gossip-column journalists such as Walter Winchell and Louella O. Parsons were familiar faces there, and the hotel was once the headquarters of the Los Angeles Press Club.

As Burk wrote, without complete exaggeration, " Anything that took place at the hotel was front-page news."

Newspaper articles profiled the hotel's chief doorman, telephone operator and gardener. There was also the retirement story about one employee, Tomas Sotelo, who was credited with washing more than 2 million dishes in 36 years of work at the hotel.

According to one account, Sotelo "washed dished for kings, queens, presidents and even emperors. One dirty dish is like another, he said."

Big Robbery Case

The hotel also had its share of well-reported crimes, including the incident in 1930 when two cigar manufacturing executives from Philadelphia and their wives were robbed of $17,000 in cash and jewelry.

One newspaper story labeled the crime one of the "most carefully planned holdups in the annals of Los Angeles police." Police vowed an "early capture" of the robber, but an arrest--if it occurred--went unrecorded in the press.

The hotel is often still associated with the Robert F. Kennedy assassination, which occurred almost 18 years ago. The New York senator was fatally wounded by gunman Sirhan Bishara Sirhan after addressing a crowd of 1,800 happy supporters in the Embassy ballroom just after he had won the Democratic presidential primary in California.

Not Permitted

It was an event that the Ambassador has tried hard to play down. Eight years after the killing, the hotel refused to allow a reenactment of the tragedy for a movie about FBI Director J. Edgar Hoover. "We didn't want to keep the mental wound open," a hotel spokesman explained at the time.

The Ambassador is losing money today because occupancy rates are running at less than 60%. It needs at least $15 million to $20 million worth of renovation work, according to spokesmen for the Schines. No longer a hotel to the elite, its guests today are largely businessmen, tourists and conventioneers.

"It's fair to say the hotel has been in a gradual decline for a number of years," said John Grinch, a real estate broker with Brooks Harvey, the New York brokerage handling the sale. (Brooks Harvey is a subsidiary of Morgan Stanley, the investment banking firm.)

"Hotels require frequent modernizing," Grinch added. "You can't sell a 1920s hotel in the 1980s. There's so much competition."

According to one source close to the hotel, annual losses at the Ambassador are "in the seven figures. That's all they would tell me."

Fred Gee, the hotel's manager for the past 10 years, confirmed that the Ambassador is losing money, but added: "A lot of hotels are running in the red. We are not in desperate circumstances. There is not a lot of debt on this property."

Chief Assets

Some argue that the steady decline could be arrested with the right renovation and development. The hotel's chief assets are its property, most of it vacant, and its sentimental place in Los Angeles history, which would make it difficult to tear the hotel down.

"You're talking about 1 million square feet of property in an urban area like Los Angeles," Crown said. "There's not another property like that in the country that I know of."

But redevelopment of the Ambassador property also faces the twin uncertainties of a sluggish market for office space in the mid-Wilshire district as well as the fierce competition in the luxury hotel market throughout the Los Angeles area.

"There are many more attractive locations for office building developments than that one," said Marvin Richman, a developer with Olympia & York, the well-known Canadian real estate firm.

Hotel consultant David Brudney said developers might want to see what happens with the face-lift of the Biltmore Hotel downtown.

"I'm not sure Los Angeles can support major restorations in two of its grand hotels," Brudney said. "Anyone with deep pockets will probably watch what happens to the Biltmore before sinking any money into the Ambassador." Financial uncertainty has always been an Ambassador trademark.

The hotel's finances were reorganized under court supervision in 1935 and a 15-year bondholder repayment plan was established, but not before a congressional committee strongly criticized the way the reorganization was handled.

Successful Management

The company that handled the reorganization work, Realty Bond Reorganization Co., located on South Spring Street, received a fat fee of $35,000 for very little work, it was charged at the time.

One congressional investigator labeled the fee "the most beautiful rooking bondholders ever got." The criticism notwithstanding, Realty Bond President J. E. Benton took over management of the hotel and ran it for more than a decade.

The Ambassador was also the object of a skirmish between two hotel tycoons, Conrad N. Hilton from Chicago and Ben Swig from San Francisco. Hilton had offered to buy the hotel for more than $6 million in 1946, a price that included $4.2 million for paying off the bondholders. Hilton even put down $582,000 as a good-faith deposit, but the offer was rejected by hotel stockholders.

Swig, who owned the St. Francis and Fairmont Hotel, claimed that he had topped Hilton's bid by a "substantial" amount, but he wouldn't say by how much because he did not want to be party to a bidding war.

"If the stockholders don't like the bid I've entered already, they know what they can do," the San Francisco hotelier said, without further explanation.

In the end, neither Swig nor Hilton prevailed. Later that year, J. Myer Schine gained control of the hotel by acquiring a majority of its common stock for $1.6 million.

The Schine era has lasted 40 years, during which time there were repeated attempts to develop the property. But all have fallen through.

Deal Fell Through

One well-publicized plan, unveiled in 1957, called for a convention center, office building and hotel complex that, according to one news account, would "one day . . . dwarf New York's Rockefeller Plaza." The first phase was to cost $30 million.

The Schine family later reached an agreement to sell its theater and hotel holdings, including the Ambassador, to a New York real estate company for $75 million, a deal billed as one of the largest real estate transactions in U.S. history. But most of the sale eventually collapsed in 1967 after the buyers failed to raise the final $50 million.

At one time the Schine family holdings included 11 hotels and 52 movie theaters around the country. "We've liquidated most of the family properties," Lester Crown said, in one of his rare interviews, "and this is about the only major one left."

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