Hotel at Van Nuys Airport Asks L.A. for Relief on Rent

Staggered by the city’s economic downturn, operators of the Airtel Plaza Hotel at Van Nuys Airport are asking the Los Angeles Department of Airports to reduce its monthly lease payments to keep the financially troubled facility from closing.

For the past two years, the hotel frequently has been delinquent on its $33,000 monthly payments, and last month its bank had to step in to offer assistance to keep the city from canceling its lease with the Airtel, city airport officials said.

The Airtel, which employs about 200 workers, is the only hotel located on airport property.

“Everybody is working hard to survive and we are looking for appropriate relief from our landlord,” said Airtel President Jim Dunn, who attributes the hotel’s problems to low occupancy due to fewer companies booking the hotel for conferences and business trips.

Dunn said he and airport officials have been meeting for months to work out a mutually beneficial agreement that will keep the hotel viable. But, Dunn said, as of yet no specific discounts or financial plans have been discussed.

The matter was brought up briefly Monday at a meeting of the Los Angeles Board of Airport Commissioners under an agenda item listed “Potential Closure of Airtel at Van Nuys Airport.”

But airport officials played down that possibility, saying both sides want to keep the Airtel operating.

Commission President Leland Wong said Thursday that he is most concerned about the 200 hotel employees who may lose their jobs if the Airtel closes. But he said he is leery about providing a reduction in rent because other airport tenants may ask for the same treatment.

Wong suggested that a possible solution would be to give the hotel a break on its rent but require repayment of the difference once business improves.

The hotel’s financial problems are in sharp contrast to its profitable beginnings.

The Airtel opened in July, 1984, and almost immediately became a success, so much so that three years later hotel operators completed a $6.5-million expansion, adding a 4,200-square-foot ballroom and 77 rooms, bringing the total to 280.

When the expansion was launched its occupancy rate was 79%

But Dunn said the occupancy rate has dropped to about 50%.

The hotel was three months behind on its rent, owing about $110,000, and was issued a notice by the Department of Airports last month, demanding that the late payments be paid within 30 days, according to airport officials. But the hotel’s bank, Sacramento Savings Bank, stepped in, offering to pay the late amount and to continue to make the Airtel’s payments, airport officials said.

According to a staff report to the Board of Airport Commissioners, the Airtel has also been delinquent in making loan payments to Sacramento Savings.

“Sacramento Savings is considering foreclosing the loan,” according to the report by Department of Airports Deputy Executive Director Donald A. Miller.

In seeking some relief from the hotel’s bills, its operators have also appealed to get the building’s property tax rates lowered, according to a spokesman for the Los Angeles County assessor’s office. County officials granted the appeal on the grounds that the hotel is worth less now due to declining property values.

In addition, the spokesman said the hotel has been placed on a special payment plan that allows operators to pay off unpaid property taxes in four smaller payments instead of a lump sum. But the spokesman said he did not know how much of its taxes were overdue.

Doug Bradshaw, executive vice president of Sacramento Savings Bank, said his bank is standing behind the hotel operators to see them through the tough economic times. He said the bank has taken no action toward foreclosing on the hotel’s loan. He declined to provide more details.

But Bradshaw said the hotel’s survival depends largely on the assistance of the Department of Airports.