New hotels approved for construction in West Hollywood will increase the 2,058 hotel rooms in the city by nearly 50 percent in the next few years. And several other projects in other areas of WeHo that are not yet approved but under discussion would boost that increase to 62 percent.
The increase in hotel rooms has raised questions among hotel owners and managers about the impact on their occupancy rates and thus their profits. A study published last year by STR Global Inc., a hotel research group, reports WeHo hotel occupancy rates were up 6.4 percent in 2013 to 82 percent. That compares with 77 percent occupancy during that period in greater Los Angeles as a whole. An analysis by the city’s Finance and Technology Services Department last year said most West Hollywood hotels reported occupancy rates of nearly 95 percent in July and August 2014.
On Monday the City Council will be asked to allocate up to $35,000 to study West Hollywood’s hotel market and determine the number of rooms the market actually can sustain. The study also will examine the impact of new hotel rooms and changes in occupancy rates on the city’s hotel room occupancy tax, which is the largest source of revenue for the city’s general fund. Those taxes were responsible for 26 percent of the general fund revenue budgeted for the 2014-2015 fiscal year.
The proposed study would look at the impact of new hotels under construction or planned in the city for the fiscal years 2016-17 through 2020-21. It will examine the impact by hotel type, price point, target market and geographic area (Sunset Strip, Design District/western Santa Monica Boulevard, Mid-City and Eastside). The study also will provide occupancy rates and hotel occupancy tax revenue projections for the new hotels.
Because of the hotel boom on Sunset Boulevard, the reputation of the Sunset Strip as a center of nightlife (and particularly rock music) has begun to change. A study published last year by Businessweek said the sound that best identifies it the Sunset Strip this year is not rock music but the sound of “buildings being demolished and new ones developed.”
The new hotels under construction are:
Kimpton, 627 N. La Peer, 105 rooms. Anticipated opening late 2016
James Hotel, Southeast corner of Sunset and La Cienega boulevards, 286 rooms. Anticipated opening late 2016.
Edition Hotel, Southeast corner of Sunset Boulevard and Doheny, 148 rooms. Anticipated opening early 2018.
Hotels projects that have been approved by the city but where construction has not begun are:
San Vicente Inn, 837-849 and 850 San Vicente Blvd., 32 rooms (three added to current 29). The project currently is under litigation.
Sunset Time, 8430 Sunset Blvd. at Olive, 149 rooms.
Hotel projects under review by city staff include:
8950 Sunset, 8950 Sunset Blvd., 165 rooms.
Robertson Lane, Robertson south of Santa Monica Boulevard, 250 rooms.
7811 Santa Monica, 7811 Santa Monica Blvd., 81 rooms.