L.A.’s Historic Biltmore Hotel Goes on Sales Block
The owner of the historic Regal Biltmore Hotel in downtown Los Angeles has decided to sell that property, along with the 25 other U.S. inns that make up the Regal chain, just two years after buying it.
Regal Hotels International Holdings Ltd., headed by Hong Kong-based hospitality executive Y.S. Lo, has enlisted New York investment firm Goldman, Sachs & Co. to market the portfolio, according to a Goldman representative. Analysts speculate the Hong Kong hotelier may be putting the properties up for sale to help pay down debts incurred in the ongoing Asian financial crisis. At least one industry consultant puts the combined value of the properties close to $1 billion.
The hotel portfolio is hitting the market at a time when hotel occupancy and room rates are continuing to edge up across the nation. At the same time, many big hotel buyers are pulling back from investing.
In downtown Los Angeles, a recovering convention business has boosted hotel occupancy to an average of 71% in the first six months of this year, compared with 66% the same time last year, according to PKF Consulting. Likewise, average hotel room rates in the city’s urban core have surged 11% to $107 a day.
However, share prices of some of the largest hotel companies such as Starwood Hotels & Resorts Worldwide and Patriot American Hospitality have plunged in recent months after a flurry of mega-mergers and acquisitions, restricting their access to capital.
“The REITs have definitely put the brakes on. Now they are turning into sellers, rather than buyers,” said Alan Reay, president of Atlas Hospitality Group, a Southern California hotel brokerage. He said Lo may be forced to divide the chain into smaller groups to find buyers.
Lo purchased the 687-room Los Angeles Biltmore in 1996 when the local hotel market was emerging from the depths of a recession. With occupancy down and real estate prices depressed, he was able to scoop it up for a reported $60 million, a fraction of the $219 million its previous Japanese owner had paid just seven years earlier. Lo spent several million dollars to renovate the rooms, said Richard Alter of Los Angeles-based Financial Capital, which advised Lo on the purchase. Room rates at the Biltmore range from $129 to $235.
Other Regal hotels offered for sale are in such cities as New York; Chicago; Anchorage; St. Louis; Nashville; Scottsdale, Ariz.; and Boulder, Colo., sources said. Regal’s hotels are managed by Lo’s separate subsidiary, Richfield Hospitality Services, which is not connected to the sale. Neither Richfield executives nor Lo could be reached for comment.
The Los Angeles hotel’s general manager, Randy Villareal, left that position in the last month to take a job with Tishman Hotel Corp. in Orlando. No successor has been named.
The Biltmore was built by a group of local businessmen in 1923 for $10 million. Besides hosting presidents from Franklin D. Roosevelt to Bill Clinton, the stately building has hosted the Academy Awards and served as headquarters for the 1960 Democratic National Convention and the 1984 Olympics. It was designated a historical landmark in 1969.
