St. Regis to Be Converted Into Condos

One of nine Los Angeles hotels involved in a protracted labor dispute is being sold and converted into a luxury condominium complex, resulting in the loss of more than 200 union jobs.

The pending sale of the St. Regis in Century City is part of an emerging trend, as investors and hotel chains see such condo conversions as potentially more profitable, industry analysts said.

But union leaders said they are concerned about job losses, and hope to rally municipal leaders to block such sales because of their negative effect on tourism and hotel tax revenues.

A partnership of Pivotal Group, DMB Associates in Phoenix and AEW Partners III is selling the hotel for an estimated $123 million to New York-based Related Cos.

The deal would be one of the most expensive in California this year on a per-room basis, said Alan Reay, president of Atlas Hospitality Group, a Costa Mesa hotel broker and consulting firm. The price of $414,141 per room would be second only to the $476,628 a room paid for Ritz-Carlton Half Moon Bay, he said.

The sale comes as the mostly upscale hotels and the Unite Here union remain far apart on terms for a new contract in Los Angeles as well as in San Francisco and Washington. Talks in Los Angeles are scheduled to resume Dec. 13.

St. Regis hotel spokesman Fred Muir said the labor fight did not influence the sale, which was expected to close Jan. 24.

“The contract negotiations with Local 11 were not an issue,” Muir said. Starwood Hotels & Resorts Worldwide Inc., which operates the St. Regis, will continue to operate the adjacent Westin Century Plaza, he said. The sale was formally announced Nov. 17 but was disclosed in a letter to workers Nov. 4.

It is uncertain whether St. Regis workers, who represent about 5% of the 4,000 workers affected by the Los Angeles contract talks, can find other jobs within the Starwood chain. But their employment at the hotel ends Jan. 22, according to a Nov. 17 letter to employees.

“The hotel will be conducting layoffs and all positions will be eliminated. This action is expected to be permanent,” the letter said, adding that there was a chance, “although by no means certain,” that some might find work at the Westin Century Plaza.

Union officials said they would seek other hotel jobs and financial assistance for displaced workers. They added that the union needed to develop a long-term strategy to deal with the growing number of hotel sales.

“We need to evaluate this as the beginning of a trend that is hitting Los Angeles. We need a city policy that deals with the impact on hotel tax revenues and on the tourist industry,” said Unite Here Local 11 President Maria Elena Durazo, adding that other Los Angeles hotels were considering similar sales.

In Florida and New England, hotel sales and condominium conversions have sparked concern among local elected officials.

In Key West, Fla., local planners, elected officials and tourism boosters have called for a 180-day moratorium on hotel conversions.

Some have been complete conversions, while others have offered partnerships in which individual investors buy some rooms as vacation getaways. When the owners are away, the rooms are rented out to guests just like a hotel.

“It’s a new trend. I wouldn’t be surprised if it becomes more common here,” said James Mbugua, consultant and trends coordinator for the San Diego office of PKF Consulting, a research and consulting arm of the hotel industry.

Consultant Reay said the conversions had been most common in Florida and Hawaii.

“For investors who buy a unit, it’s like having a second home in a high-end hotel in a very desirable location,” Reay said.

The St. Regis was built in 1984 as an addition to the Century Plaza. The 30-story tower has 297 rooms, including high-security suites that have housed heads of state, including U.S. presidents starting with Ronald Reagan.

In 2000, the owners spent $40 million to upgrade the property and converted it to a St. Regis, Starwood’s luxury brand. The hotel boasts a four-star rating from the Mobil Travel Guide, and its location near Fox Studios has made it a popular destination for Hollywood events and celebrity interviews.

But the St. Regis “has suffered in terms of not getting numbers they need,” said Reay, and other prospective buyers contemplated a change of hotel brands.