In a surprising swap of luxury chainlets in one of the Los
Angeles area's highest-profile locations, Barry Sternlicht's 1 Hotels ecoluxe
brand plans to take over the nearly completed hotel site on West Hollywood's
Sunset Strip previously earmarked for the James Hotels luxury boutique brand.
With a West Hollywood location, 1 Hotels would gain exposure
in one of Southern California's most lucrative sub-markets. Last year, revenue
per available room in the Beverly Hills-West Hollywood-Hollywood area jumped
10% from a year earlier, while room rates averaged about $300 a night, or
almost double the Los Angeles-Long Beach average, according to research firm STR.
The 1 Hotels site is located at the corner of Sunset and La
Cienega boulevards and is the centerpiece of a mixed-use project that's
considered the largest new development since West Hollywood was incorporated in
1984. The project, originally called Sunset Millennium, was approved by West
Hollywood's city council in 1999, but financing issues have delayed its launch.
CIM acquired the group of properties for the mixed-use site
in 2011 and began construction in 2013. James Hotels said it would brand and operate
the hotel the following year.
"It's a market that really likes boutique hotels, which
is why 1 Hotels will do fine there," Bruce Baltin, Los Angeles-based
managing director at consultant CBRE Hotels. "West Hollywood has branded
itself as a creative city since the mid-'90s, and they've done a very good job
of that."
The acquisition and rebranding of the high-profile site
would speed up efforts by Sternlicht, who launched W Hotels when he was CEO of
Starwood Hotels & Resorts, to take the 1 Hotels brand nationwide by adding
properties in the country's most popular destinations. 1 Hotels, which debuted
in Miami in 2015 and now has properties in Manhattan and Brooklyn, N.Y., said
earlier this year that it planned to add a hotel in California's Silicon Valley
in 2019.
"He's one of the shrewdest dealmakers out there,"
STR senior vice president Jan Freitag said of Sternlicht. "L.A. is a
gateway city with huge appeal with domestic and foreign investors. And you have
to have a footprint there to be a truly national brand."