UNITE HERE Letter to Hotel Buyers: Will Five Bars, Two Restaurants, and $30 Million in Renovations Push Hotel Figueroa Owners’ Asking Price Past What Buyers Should Pay?

LOS ANGELES--()--UNITE HERE issued the following letter to buyers considering purchasing the Hotel Figueroa:

Dear Potential Hotel Figueroa buyer,

After $30 million in renovations, Hotel Figueroa owners GreenOak Real Estate and Urban Lifestyle Hotels are attempting to sell the downtown Los Angeles property before it opens. While an Urban Lifestyle Hotels principal told the Los Angeles Times in April 2015 that rates at the renovated hotel would be about $250 per night, as of July 27, 2017, rooms were available for booking starting November 1 at $419 per night.

Potential buyers should consider whether the Hotel Figueroa’s owners are being overly optimistic about the hotel’s ability to support room rates that nearly doubled from the Urban Lifestyle Hotels principal’s prediction. According to Smith Travel Research, the average daily rate for hotels in the Los Angeles Central Business District in April 2017 was $211.73. As of July 27, 2017, the cheapest rooms available at the JW Marriott LA Live and Intercontinental Downtown (both luxury hotels) on November 1 are listed for $299 and $264, respectively, more than $100 less than the rate for a room at the Hotel Figueroa on the same date.

Potential buyers should be wary of whether the property can support the smorgasbord of food and beverage venues that the owners have included in the renovation. The hotel will feature two restaurants and five bars. The restaurants will be operated by Casey Lane, who runs the successful Tasting Kitchen in Venice but suffered a setback when his restaurant The Parish closed in downtown Los Angeles after only eighteen months.

GreenOak co-founder Sonny Kalsi told an investor in March 2017 that “it would be hard for me to imagine that whoever owns that hotel wouldn’t be running it as a union hotel.” UNITE HERE Local 11 expects that the buyer of the hotel will sign a card-check neutrality agreement similar to the agreements followed at the recently-opened Hotel Indigo and Intercontinental Los Angeles, where Local 11 was recognized as the representative of hotel workers. Labor disputes at other Los Angeles hotels have included boycotts, strikes, pickets and communication with the public and investors in hotel properties.

Contacts

UNITE HERE
Jordan Fein, 312-576-5048
Senior Research Analyst

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Release Summary

Buyers should be wary of overpaying for the Hotel Figueroa following extensive renovations and should sign a labor peace agreement with UNITE HERE.