The Real Deal
03/29/17

West Hollywood Mayor Seeks Moratorium on Hotel Construction
By Hannah Miet

https://therealdeal.com/la/2017/03/29/west-hollywood-mayor-seeks-a-moratorium-on-hotel-construction

West Hollywood Mayor Lauren Meister is wary of the hotel boom sweeping the city.

So wary, in fact, that she will bring a proposal to City Council on Monday calling for a moratorium on new hotel development until West Hollywood conducts a study on the economic impacts of a room surplus.

In her proposal, Meister cites a study conducted by PFK Consulting and CBRE Hotels last year, which predicted the volume of projects in the pipeline could reduce occupancy and hotel room rates, Wehoville reported. If all 1,229 rooms in hotel projects in the pipeline are completed — an almost 60 percent increase in inventory — WeHo’s hotel room occupancy rate could fall from its current average of 80 percent to 68 percent in 2020, the report predicted.

In response to the report, Atlas Hospitality Group said the surplus of rooms would “cannibalize the market” and potentially decrease the hotel room tax taken in by the city by as much as $1 million in 2020 and 2021.

Meister argues these warnings were not given enough attention. The council “received and filed” the information without taking action, she told Wehoville. Additionally, the PKF report did not take into account four hotel projects under consideration in the city, as well as those cropping up surrounding areas such as Beverly Hills, she said.

Meister will ask that the city consider ways to diversify its tourism-dependent economy, Wehoville reported.

“If there is another recession we need to know where our revenue is coming from,” she told the website.

A moratorium would put several major hotel projects in jeopardy, including the 149-key Pendry hotel, Faring Capital’s proposed 251-room Robertson Lane project and the Gwyneth Paltrow-affiliated Arts Club at at 8920 Sunset Boulevard.