CITYWIDE — If everything goes according to plan, Santa Monica will see an influx of at least four new hotels and one complete remodel in Downtown, and business officials say the city can use all the rooms it gets.
The Planning Department has received proposals for two brand new hotels immediately adjacent to one another at 1554 Fifth Street and 501 Colorado Avenue. The new Shore Hotel on Ocean Avenue is nearing completion, and a development agreement is in the works for 710 Wilshire Blvd., where developers hope to convert a mixed-use office building into a boutique hotel.
A fifth, the remodel of the Fairmont Miramar Hotel, will actually constitute a reduction in the number of hotel rooms, from the hotel’s current 302 to 265.
According to the Santa Monica Convention and Visitor’s Bureau (CVB), there are already 36 hotels in Santa Monica’s 8.3 square miles, and the new ones currently in various stages of the planning process would bring another 550 rooms to the area.
Those rooms are desperately needed, with the current stock already running at 91.32 percent occupancy, said Misti Kerns, CEO of the CVB.
“We certainly are turning people away,” she said.
In part, it’s the cost of the luxury hotels that have come to populate Downtown. According to the most recent statistics, the average daily rate for a room in Santa Monica is $327.68 per night, which prices out some visitors.
But often, the problem is room availability. The CVB Visitor’s Center on Main Street sees about eight to 10 people a day who do not have reservations and desperately need rooms.
The center does what it can, Kerns said, but sometimes they will have to send would-be guests to Venice or other nearby areas to get a room.
Two of the proposed hotels will attack both of those underlying problems.
Plans for Colorado Avenue and Fifth Street would remove the Midas car repair shop and a pre-existing office building and replace them with two mid-price hotels, a Hampton Inn and Courtyard by Marriott.
Those brands in nearby cities can cost between roughly $100 and $200 per night, depending on the room and amenities, which puts them far below the average daily rates in Santa Monica.
Santa Monica needs that variety of lower-priced hotels to serve a niche market for traveling families and others that can’t afford the expensive luxury hotels that dominate the city’s supply, Kerns said.
“We would certainly like to see additional, mid-level rooms become available,” Kerns said. “When you are running at the percentage of occupancy that we are, it certainly shows that there is room for additional inventory.”
Hotels are an attractive land use, not only for the amount of money and jobs they create, but also for their relatively minimal impact on traffic.
They are economic powerhouses, accounting for 2,748 of Santa Monica’s 10,080 hospitality-related jobs and providing approximately $34 million in taxes to City Hall’s general fund, according to a 2010 economic impact report.
At the same time, hotel patrons spend an average of $250 per day in the city, and 70 percent of them get around using something other than a car, according to CVB figures.
That makes them a high dollar value with relatively low cost to the surrounding community, wrote Kim Baker, director of marketing for the CVB, in an e-mail.
When city officials were working on the Land Use and Circulation Element of the General Plan, which dictates development, a financial consultant was asked to come in to put a value on the various kinds of land uses in terms of what kind of revenues they brought to the city, said Planning Commissioner Ted Winterer.
Housing brought in the least money and cost the city in terms of utilities and maintenance, but the inclusion of hotels into the mix completely wiped out the housing-related losses.
“You almost thought the numbers were fudged,” Winterer said.
That kind of economic potential means that hotels are primary to any discussion of development in the city.
In a July meeting about development in the Mixed Use Creative District and land immediately around the Bergamot Station, consultant Tom Nordyke told community members that the arts could persist in the Bergamot area, but there needed to be a mix of revenue-generating uses there as well to help subsidize them.
High on that list was hotels.
Perhaps it isn’t surprising then that hotel uses are being proposed for the Bergamot Station when the Expo Light Rail line comes in 2015, but also for the development at Fifth Street and Arizona Avenue, which hasn’t been fully planned yet.
At this point, no one is concerned that the number of hotels and rooms might exceed demand, but officials will be monitoring the affordability mix and placement of those businesses, Winterer said.
Technically speaking, it is against city code to tear down an affordably-priced hotel and then replace it with an expensive one, Winterer said, but developers who choose to do so only pay a penalty into a fund that subsidizes the hostel on Second Street.
“Just as we want a diverse mix of housing opportunities in our town, we want to make sure there are a mix of hotel spaces available,” he said.
Developers are usually asked to perform some kind of demand analysis as part of development agreement negotiations to see if the project makes sense economically, said Planning Director David Martin.
The two hotels at Fifth Street and Colorado Avenue are not far enough along in the process to warrant that level of detail.