U.S. Group to Acquire Westin Hotels From Japan’s Aoki : Lodging: South Coast Plaza hotel in Costa Mesa and two in San Francisco area are included in the $561-million deal.

A U.S. investor group said Friday it agreed to buy Westin Hotel Co. from Aoki Corp. of Japan for $561 million, in another sign of the resurgent interest in the recovering hotel industry.

The deal, which includes the 390-room Westin South Coast Plaza in Costa Mesa, also marks another pullback by a Japanese multinational that invested heavily in high-profile but ill-fated U.S. properties during the 1980s. An Aoki-led group paid $1.53 billion for Westin in 1988.

Westin manages 80 hotels in 19 countries, although most of the properties are owned by outside parties. However, the sale includes not only the Westin South Coast Plaza but also the Westin St. Francis hotel in San Francisco and the Westin Hotel at San Francisco International Airport.

It does not include ownership of the Westin Bonaventure in downtown Los Angeles or Westin’s Century Plaza & Tower in Century City, which are owned by Equitable Life Assurance Society of the United States and JMB Realty Corp., respectively, nor Westin’s Mission Hills resort in Rancho Mirage.

The 17-story Westin in Costa Mesa has seen its occupancy increase by about 15% in the past year, in part because of the completion of a bridge linking the hotel to the South Coast Plaza shopping complex. The hotel is also near the Orange County Performing Arts Center.

The group buying Westin includes Starwood Capital Group, a privately held firm in Greenwich, Conn., that acquires real estate on behalf of wealthy clients such as the Pritzker family (which owns Hyatt Hotels) and the Ziff publishing family.

The group also includes the investment banker Goldman, Sachs & Co. in New York, and Edward Thomas Cos., a Beverly Hills-based hotel operator that owned the Beverly Hills Hotel from 1953 to 1986.

The Starwood group, in addition to acquiring ownership stakes in the Westin properties in Costa Mesa and San Francisco, would also purchase Aoki’s equity interests in 10 other Westin hotels.

Aoki would retain its ownership of nine other properties in the United States and Canada, but Westin--under the Starwood group’s control--would continue managing those hotels and control the Westin name worldwide.

Westin’s Bonaventure in Los Angeles was symptomatic of the hotel industry’s struggle in the early 1990s. The insurer Equitable assumed ownership of the 1,400-room hotel after its previous owners defaulted on a $75-million mortgage held by Equitable in late-1990.

But the hotel industry’s prospects have improved markedly in recent months.

Rising occupancy rates and room prices, spurred by the economy’s overall recovery and a dearth of lodging construction in recent years, are providing hotels with solid financial gains this year, and analysts predict continued growth in 1995.

Thomas Slatkin, a principal with Edward Thomas Cos., said that is a key reason why his firm is part of the group buying Westin, a Seattle-based company that was founded in 1930.

“This is the second full year of recovery for the lodging business, and the near- to medium-term outlook includes double-digit improvements in both sales and profits,” Slatkin said.

But Aoki decided about a year ago to unload. In February, it struck a deal to sell Westin to a Mexican conglomerate, DSC, for $708 million. But that deal collapsed early this month.

Aoki, a Japanese construction company, plans to use the Westin proceeds to pare its bulging debt.

Starwood’s founder and chief executive, Barry Sternlicht, said in a telephone interview that “if you owned anything in the 1980s, it was worth less in the ‘90s, and Aoki wasn’t immune to that.”

Times staff writer Debora Vrana contributed to this report.