Lodging at Van Nuys Airport Hasn’t Always Been a Runaway Success

The Airtel Plaza Hotel and Conference Center here is the only hotel in the city where you can taxi practically right up to your room. And not in a cab.

Located at Van Nuys Airport, the privately owned Airtel opened in 1984 with an eye toward capturing some of the private jet and aircraft travelers flying into Van Nuys on business.

But the hotel caught its share of downdrafts in the early ‘90s and struggled to stay aloft. An expensive 1989 expansion, combined with a recession and cutbacks in corporate travel, put the hotel in turbulent financial conditions.

“We were affected by the ups and downs of the economy, and when the Valley was hard hit by the recession, it was touch and go whether the hotel could survive,” said James A. Dunn, Airtel president and CEO.

When Dunn bid on the vacant property in 1982, he knew little to nothing about the hotel business. A real estate developer, his previous projects included industrial parks, mobile home parks and condominiums.

But the idea of a hotel connected to one of the country’s busiest general aviation airports and centered in the San Fernando Valley seemed like a good plan, especially since airport business was really taking off.

“A lot of people thought we were odd to build here,” Dunn said. But “based on the volume of traffic at the airport and the surrounding businesses, it seemed like a great business venture. We saw a void for a full-service hotel.”

The $20-million hotel opened with great fanfare. It had 191 rooms, 120 employees and a great gimmick--guests could taxi right up to the hotel in their airplanes, tying down on a landing strip just outside the back door. Dunn knows of only three other hotels in the state that can boast the same perk (the Sheraton at Montgomery Field in San Diego, the Hilton at Santa Maria and the Sheraton in Concord).

For the first few years, occupancy rates at the Airtel were around 70%. Corporate and government entities, such as General Motors, Hughes Aircraft, Litton Data Systems, the FBI and the state of California, fueled the boom by renting hotel suites and meeting rooms.

In 1989, the Airtel opened a $6.5-million, 77-room, five-story tower, divided from the main building by a landscaped patio complete with a mini waterfall and a bower ideal for weddings.

Increased rent for the tower land, plus construction costs, combined with a flagging economy to put the Airtel in a tailspin. By November 1993, the hotel was behind on its rent and looking for options.

It was a scary time, Dunn said, and not a period he likes to talk about.

The Airtel, which sits on land owned by the Los Angeles Department of Airports, asked the city for a rent reduction and permission to turn the tower into housing for senior citizens.

According to the hotel’s petition, the conversion would “avoid the disastrous possibility of the closure of such a large and potentially viable enterprise.”

Although both requests were denied, Dunn held on.

“We put a lot of effort and money into this [hotel] and [giving up] was not attractive,” he said.

Dunn, who lives in Hidden Hills and is currently president of the Van Nuys Airport Assn., won’t discuss specifics of how the hotel survived, simply noting that “we had a lot of help from a lot of people. Suppliers and lenders helped us when we needed a little extra time.”

The Airtel currently pays $16,808 a month in rent to the city, plus 5% of the gross receipts from food, alcohol, banquet and conference sales, tie-down fees, and gift and merchandise sales. It pays another 7.5% of gross receipts from room rentals and 40% of gross receipts from car rentals.

Don Schultz, president of the Van Nuys Homeowners Assn., is a big supporter of the facility.

“The Airtel is the best thing the airport has--it’s the only thing located on airport grounds that doesn’t create any noise,” he said. “It’s attractive and well-maintained, is great for meetings and is good for the city.”

Dunn wouldn’t disclose current occupancy rates for the Airtel. He did say that about 75,000 people come through the hotel in a year, with 62% of the business coming from corporate and commercial clients.

PKF Consulting Inc., which charts the hotel business, said the Airtel hasn’t reported occupancy rates since 1994.

Up until then, PKF said, the hotel had been average in its daily rate but below average in occupancy.

Room rates start at $89, and suites go for $175 a night.

“The concept of having a full-service hotel, with reasonable rates, in a commercial area is a good one,” said Bruce Baltin of PKF. “The property fits a market need.”

The hotel’s main building was renovated in 1996. Dunn said the company will spend almost $1 million this year to “freshen up” the public areas and the tower rooms.

Banquets and meeting room rentals also bolster the hotel’s bottom line. Besides corporate meetings, many public agencies use Airtel facilities, including the Van Nuys Airport and the Board of Airport Commissioners.

“About 40% of our business is banquet meetings and social functions,” Dunn said. “This is about twice the norm in the industry.”

Dunn said the Airtel tries to combat better-known hotels by offering personalized service.

“We like to say we have a chain of one,” Dunn said. “We treat every guest as if they are special because we don’t want them to move on to another property.

“It’s very expensive and complicated to get someone through the front door,” he added. “But once I get you, I’ll keep you.”

Even through the lean years, he said, “We always stayed within our vision, which is to provide for the needs of the sophisticated business traveler.”