Bill Targets Loss of Hotels

Los Angeles City Council members today will consider a proposal supported by organized labor to block developers from converting hotels to condominiums for the next six months. Some business leaders strongly oppose the idea.

The proposed moratorium is needed to stem “an alarming trend” of eliminating hotel rooms -- and therefore union jobs -- at a time when the local hospitality industry is finally showing signs of improvement, said Councilman Martin Ludlow, who introduced the motion. If approved by a council committee today, the full council will consider the plan Friday.

Los Angeles also is experiencing record demand for housing and the owners of at least four hotels are considering converting all or part of their properties to residential use:

* Buyers of the St. Regis in Century City told more than 200 members of Local 11 of Unite Here, which represents hotel employees, that they would be out of work Jan. 22, when the four-star hotel is set to close to make way for a condo conversion.

* The manager and part owner of the Westin Bonaventure in downtown Los Angeles, Peter Zen, said he might want to convert half of the 1,400 rooms in his hotel to about 200 condos if the planned 1,200-room Hilton Hotel next to Staples Center ended up draining business from his property.

* One of downtown’s two Holiday Inns, a six-story property at 750 Garland Ave., closed this year and is being converted to apartments by a Newport Beach developer.

* The Furama Hotel near Los Angeles International Airport would lose many of its 775 rooms in a planned renovation that would turn much of the property into apartments and stores, according to hotel consultant Alan Reay of Atlas Hospitality.

Union leaders fear that at least two other downtown hotels may be going condo.

Hilton Checkers Los Angeles on Grand Avenue is being purchased by Falor Cos. for $35 million, according to trade publication Commercial Real Estate Direct. Falor specializes in selling individual hotel rooms to investors. Such “condo hotels” continue to rent rooms to guests when they are not occupied by their owners. Falor didn’t return a call requesting comment.

The Hyatt Regency on Hope Street is for sale and is considered a prime candidate for conversion. Developer Shaul Kuba of CIM Group on Tuesday denied reports by real estate brokers that his Hollywood-based firm was buying the property.

Altogether the city faces the loss of 2,000 rooms, 1,000 jobs and the revenue from a 14% “bed tax” on guests, Ludlow estimated.

Real estate attorney Rick Davis of Greenberg Traurig said the City Council might be overstepping its bounds in considering a moratorium.

“To cut off property owners’ options of how they want to structure ownership of their property or how they want to dispose of it is an undue interference with the right of the owners,” Davis said.

He warned that Los Angeles could wind up driving away investment “if the city gets a reputation for imposing restrictions on property owners when some union wants them to.”