Los Angeles entertainment impresario Sam Nazarian is expected to announce Monday that he has agreed to take over a stalled hotel development at the famous Hollywood and Vine intersection and open this summer or fall.
Nazarian, perhaps best known for his trendy nightclubs catering to the young and stylish, will finish the hotel to suit his own taste before plunging into the competitive Hollywood hospitality market. Among his competition will be the juggernaut W Hollywood Hotel & Residences, which opened just a block away on Hollywood Boulevard in January.
“We haven’t got a name or a concept yet,” Nazarian said, “but we will shortly. We’re very bullish on Hollywood.”
The hotel that Nazarian’s company, SBE, will bring to life is a dark red five-story building at 1717 Vine St. that was to be known as Palihouse Hollywood before its developer, Palisades Development, ran into financial problems. Palihouse, with an estimated development cost of $50 million, was intended to be a hip extended-stay hotel and companion to Palihouse Holloway in West Hollywood.
The developer lost financial control of the property in the recession and Hollywood’s largest commercial landlord, CIM Group, bought the unfinished hotel for $15.8 million in February. SBE will operate it for CIM, which also owns the Hollywood & Highland shopping and entertainment center.
Hotels and resorts have had a rough go since corporate and leisure travel started to dry up in 2008, but business is finally improving, said analyst Bruce Baltin of PKF Consulting. “Rates are still down, but occupancy is increasing,” he said.
Los Angeles County hotels saw room occupancy rise 7.6% in the first four months of the year compared with the same period in 2009, and, Baltin said, “Hollywood is stronger than other parts of town.”
Nazarian plans to spend more than $5 million to complete the hotel and restaurant and to open them within three or four months. The restaurant will be a new concept, said Nazarian, who created the Bazaar by Jose Andres restaurant in 2008 in his SLS Hotel in Beverly Hills. Bazaar was well-received by critics but is known for being pricey.
The new restaurant “will be a little more approachable in check average than Bazaar but equally exciting,” he said.
Nazarian’s company also operates several other restaurants including Gladstone’s in Malibu, Abbey Food & Bar in West Hollywood and four Katsuya restaurants in Los Angeles and Glendale. SBE runs the SLS Hotel in Beverly Hills and others including the Sahara Hotel & Casino in Las Vegas, Miami’s Ritz Plaza and the Four Points Sheraton at Los Angeles International Airport.
The former Palihouse, which Nazarian estimates is about 85% complete, is already different from traditional hotels. Its average room is 800 square feet and contains a kitchen, washer and dryer. The target customer is “a new generation of bohemian do-it-yourselfers,” Nazarian said, who are tired of “big box hotels that are over-designed and over-built.”
He hopes to attract guests in the entertainment industry who come to town to work on extended projects, he said.
“The size of the room and its apartment-like nature allows people to stay short term or long term,” Nazarian said. Room rates haven’t been set yet.
The timing for the new hotel may be right, analyst Baltin said. Hollywood was run-down and seedy for decades but has made long strides in the last several years with billions of dollars’ worth of new development and the addition of thousands of new residents.
“Hollywood has always had the fundamentals to gain traction,” Baltin said. “It’s an authentic kernel of L.A. and the entertainment industry. Now is probably a good time for Sam Nazarian.”