World’s Richest Man Balks at Fix-Up Costs for Beverly Hills Hotel

Things are bad all over. Even the world’s richest man is having second thoughts about remodeling his Beverly Hills property.

Not just any property, of course. It’s the Beverly Hills Hotel, and the construction cost would be about $150 million. That’s more than most people make in a lifetime, but more or less pocket change for a man worth $31 billion by Fortune magazine’s estimate.

Still, Muda Hassanal Bolkiah, the Sultan of Brunei, through his country’s investment agency and its real estate subsidiary, Sajahtera Inc., has asked Beverly Hills to hold off any decisions on the zoning changes needed to permit the ambitious plan to revamp the hotel.

The problem is largely financial, according to Kerman Beriker, general manager of the 80-year-old hotel. After all, the rich don’t stay rich by making unprofitable investments.

But Beriker said that Sajahtera will be coming back with a new plan in a month or two, one that might save the sultan some money while placating the neighbors.

Files at the city’s Planning Department bulge with letters from residents who like the proposed face lift for the famous pink hotel. But there are other denizens of the estates north of Sunset Boulevard who have raised objections, most of them concerning a plan to redirect hotel traffic onto Crescent Drive.

One neighbor who really doesn’t like it is financier Leonard Green, a mergers and acquisitions specialist who lives across an alley from the back of the hotel.

Appalled at the thought of three years of construction under his windows, Green has retained lawyers from the prominent firm of Gibson, Dunn & Crutcher to press for an environmental impact report on the hotel project.

If required by city officials, this would delay construction for several months and possibly scuttle the project altogether.

Green and his attorneys cited the threat to historic structures at the hotel, which predates the city of Beverly Hills by two years, and warned of air pollution, construction noise, violations of privacy and increased traffic if the remodeling goes ahead.

But Beriker said the new plan will go some way toward meeting the concerns of the neighbors.

The hotelier declined to go into detail, but a city official who is familiar with the proposal said that it would keep traffic off Crescent Drive, put off renovation of some bungalows and other structures that are closest to Green’s property, and dispense with a new parking structure and an elaborate suite intended for chiefs of state.

“We are putting our wish list together and bringing back what we need to bring the hotel up to the five-star status,” said Beriker, who has expressed concern about losing business to the lavish new Peninsula Hotel and other rivals.

Renovation for the Beverly Wilshire cost just over $100 million, according to Georgiana Francisco, the hotel’s public relations director.

For the Beverly Hills Hotel, the construction cost would amount to $149.5 million, according to an economic report submitted by Sajahtera to the city Planning Department. Beriker declined to confirm that figure or to say how much would be saved by cutting back.

“The hotel is not owned by the world’s richest man but by the Brunei Investment Agency--it’s an investment,” he said. “What we’re doing is making sure we do the right remodeling project to reach the market.”

Though the immediate neighbors have concerns of their own, the hotel is also the target of an informational campaign by Herb Glaser, a Beverly Hills resident who is unhappy with Brunei’s voting record at the United Nations.

In an interview with the Jewish Journal earlier this year, Glaser pointed out that Brunei, a small, oil-rich, predominantly Muslim country on the island of Borneo, voted with Libya, Iraq and other longtime foes of Israel to oppose a recent decision by the General Assembly to cancel its resolution equating Zionism with racism.

An informal survey of Jewish organizations found several groups who said they might have used the Beverly Hills Hotel to stage their fund-raising dinners but looked elsewhere after Glaser’s comments appeared in the Jewish Journal.

“It’s a matter of (the sultan) coming more into focus with this vote,” said Gary Greenebaum, executive vice president of the Los Angeles office of the American Jewish Committee.

But when asked if there has been any impact at the hotel, Beriker answered, “None at all.”

The hotel management is also faced with demands by Local 11 of the Hotel Employees and Restaurant Employees International Union that the hotel rehire at least some of its 350 workers after the shutdown, and keep the union as a bargaining agent.

After a demonstration of 700 workers filled the streets near the hotel, a delegation of 60 workers attended a Planning Commission meeting to dramatize their concerns.

“The expectation is that if you close for two years, all your workers are not going to come back, but a lot of them are longtime workers, and those people at least should be given the opportunity to come back, and new people should be given the opportunity to join the union,” said Lee Strieb, a research analyst for Local 11.

Beriker declined to comment on the contacts with the union. If the latest proposal is approved, he said, construction could begin early next year.