Hotels See Room in Market for Luxury at Lower Rates

As the travel business struggles to get back on its feet, two new high-end hotels in Burbank and Santa Monica plan to overcome a challenging environment by offering chic accommodations at rates attractive to price-conscious business travelers and tourists.

The $20-million Graciela Burbank, which opens Wednesday, and Viceroy Hotel, a $42-million project scheduled to debut this summer, will cater primarily to business travelers in the entertainment, advertising and related industries.

The Graciela Burbank touts its proximity to a cluster of studios, including Warner Bros., Disney and KNBC, in the eastern San Fernando Valley. The 170-room Viceroy will sit near the ocean amid the restaurants and amenities of Santa Monica.

But the hoteliers, mindful of a weak economy, are eager to offer their guests a good deal as well as luxury accommodations.

“We have priced ourselves below some of the highest-priced hotels,” said Brad Korzen, chief executive of Los Angeles-based KOR Group, which will charge an average of $225 a night for a room at the Viceroy. The former Pacific Shore Hotel at Pico Boulevard and Ocean Avenue is being renovated by Taisei Construction.

At the 101-room Graciela Burbank, on Pass Avenue near Alameda Avenue, the $155 average room rate is higher than those at most nearby properties but below the rates found at comparable hotels in other parts of Los Angeles, said hotel manager Jerome Strack.

“If you look at hotels on the Westside, a lot of their business comes from Burbank,” Strack said. “The hotel was built so they don’t have to go over the hill and through the canyons to get to Hollywood.”

Although those in the entertainment industry are known for paying a premium for hotels and airfare, even Hollywood studios are looking for bargains these days.

“With all the cost cutting in the industry, a lot of people are cost- conscious,” said Robert Zarnegin, who developed the Graciela Burbank as well as the Peninsula Hotel in Beverly Hills.

Hotel industry observers say the outlook for both properties is promising given the industry’s ongoing recovery and relatively little construction in the Los Angeles area.

Santa Monica’s hotel occupancy rate this year will rise to about 75% after falling to a dismal 68.4% at the end of 2001, according to PKF Consulting.

In the Burbank area, the vacancy rate, which did not suffer much of a drop last year, will remain relatively steady at 71%.

“They are both in pretty strong markets,” said Bruce Baltin, a lodging industry specialist at PKF Consulting.