As the economic downturn has decreased occupancy at luxury hotels, many have been forced to slash rates or offer special perks to get people in the door.
WSJ: High-end hotels saw a decrease in occupancy to about 61% from about 74%, and a nearly 20% drop in revenue per available room, a key industry measure, during the first week of December, according to hotel industry watcher Smith Travel Research. The entire hotel sector has “entered the initial stages of one of the deepest and longest recessions in the history of the domestic lodging industry,” warned PKF Hospitality Research earlier this month.
Many of L.A.’s exclusive hotels have begun making concessions to hard times. The Montage, which has a 20,000-square-foot spa, is offering a rate of $395 a night in early January for a deluxe guest room — a $200 discount. The SLS offers a half-priced rate for a second night and $50 off any spa treatment with a meal at its Philippe Stark-designed restaurant…
…The new hotels had little choice but to push ahead with openings even as consumer spending plunged. SLS owner Sam Nazarian said that it became clear the economy was declining as construction was underway. But once financing for a project is secured, delays can be costly. Even a slow opening will generate some revenue.
SLS competes for the same A-list clientele as several recently opened lodges. Thompson Beverly Hills, a 107-room boutique hotel with private rooftop bar and pool lounge, opened earlier this year. The London, owned by private equity firm Blackstone Group and boasting room service by chef Gordon Ramsey, opened in West Hollywood last spring. The Montage, operated by legendary hotelier Ali Kasikci, is in the famous Beverly Hills 90210 zip code. It opened last month.
“Even though everybody has scaled back, they’re still coming,” says Mr. Nazarian, who owns SLS together with his family and outside investors. He spent $230 million to purchase, gut and renovate the 300-room, 60-suite hotel, and went ahead with the grand opening so not to appear to respond to what he calls a temporary downturn.
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