Hotel Market Study Downtown Los Angeles Supporting the Los Angeles Convention Center

HOTEL MARKET STUDY DOWNTOWN LOS ANGELES SUPPORTING THE LOS ANGELES CONVENTION CENTER

2017

Full report available at www.josehuizar.com/2017_dtla_hotel_market_study INDEX OF EXHIBITS

executive summary ...... 1, 2 RECOMMENDATIONS PROXIMITY ...... 23 BACKGROUND RATINGS 24 record-breaking visitation 3 MEETING SPACE ...... 24 transient occupancy tax growth ...... 4 TOOLS ...... 25 city of la lodging metrics ...... 5 INFRASTRUCTURE ...... 25 lacc performance ...... 6 convention center comparison ...... 7 CONCLUSION ...... 26

analysis hotel supply in compArable cities ...... 8 west coast city hotel roomS by distance ...... 9 west coast city hotel rooms by RATING 10, 11 hotel meeting space in comparable cities ...... 12 existing hotels with 3/4 mile of lacc ...... 13 THE area’s newest hotels ...... 14 map of existing hotels 15 hotels under construction 16 map of existing and under construction hotels 17 commissioned by: proposed hotels 18 councilmember josÉ huizar proposed hotel highlights 19, 20 map of existing, under construction, and proposed hotels . 21 prepared by: new hotel absorption 22 robert r. “bud” ovrom EXECUTIVE SUMMARY

Downtown Los Angeles is booming! And probably no development has been a bigger ‘spark plug’ for that boom than the Sports and Entertainment District in South Park, with the Staples Center, the Microsoft Theater, the reinvigorated Convention Center, LA Live and the surrounding hotels and residential/retail development. The continued growth of that prosperity will be even further enhanced with additional hotel rooms.

This report highlights that Los Angeles has doubled the number hotel rooms within walking distance of its Convention Center in just the last four years, from about 2,500 rooms to more than 5,000. And, there is every indication the District can support even more.

Tourism and the Leisure and Hospitality Sector are often overlooked or “taken for granted” in Los Angeles, eclipsed by higher profile industries such as entertainment and high tech. In fact, Leisure and Hospitality is one of the fastest growing sectors in our local economy. Visitation increased almost 23%, from 38.5 million visitors in 2010 to 47.3 million in 2016 – and is ahead of the trajectory needed to reach the City’s goal of 50 million visitors by 2020.

The Transient Occupancy Tax (TOT) charged to hotel guests was the seventh largest General Fund revenue source in Fiscal Year 2014-15, and had the highest year-over-year percentage growth, reaching a record breaking $248.5 million in 2016, up 13.9% from 2015.

In 2016, City of Los Angeles hotels saw double-digit percentage increases in both Average Daily Rate (ADR) and Revenue Per Available Room (RevPAR) and their occupancy rates averaged more than 80% for the third consecutive year! Among the top 25 U.S. markets, the Los Angeles market had the highest year-over-year RevPAR growth (the most important lodging metric) at 10.56% for 2016.

That high level of economic growth will be enhanced with even more hotels, starting with the Sports and Entertainment District in downtown.

1 EXECUTIVE SUMMARY (cont.)

In 2013, with only 2,597 hotel rooms in the targeted area, the Convention and Tourism Development Department set what seemed like an implausible benchmark of 8,000 hotel rooms open or under construction within walking distance of the Convention Center by 2020.

Today, that goal is clearly within reach! With 4,637 rooms now open and another 717 currently under construction, the District will soon have 5,354 hotel rooms - over twice as many as existed when the goal was set in 2013 – and 67% of the way to 8,000.

This report will also itemize an additional 10 hotels, totaling 4,434 rooms, which have been proposed and accepted by the Planning Department. IF all of these proposed hotels were built, the original goal would actually be exceeded, with a total of 9,788 rooms. Given the nature and economics of development proposals, not all these hotels will be constructed, but it does demonstrate considerable interest in hotel development in the District and a high level of confidence that the goal of8,000 rooms can and will be reached.

Although 8,000 hotel rooms will still be less than the City’s major competitors, it is probably the most the market can realistically absorb by 2020. Moreover, it is a stunning achievement compared to where the District was just four years ago!

The exciting success of the Convention Center and the surrounding sports and entertainment venues should not be taken for granted, and the City and private sector cannot be allowed to rest on their laurels. When it comes to remaining competitive with other convention center cities, the status quo never lasts – every day, every market is either getting stronger or weaker. With continued public and private-sector leadership and diligence, Downtown Los Angeles’ best days as a competitive, vibrant and dynamic Convention Center City lie ahead!

2 BACKGROUND RECORD-BREAKING VISITATION

VISITORS TO LOS ANGELES COUNTY BY CALENDAR YEAR

50M 3.8% 3.1% 45M YOY % INCREASE 4.8% 2.0% 2.5% 4.9% 47.3M 45.6M 40M 44.2M 41.4M 42.2M 40.4M 38.5M TOTAL VISITORS IN MILLIONS VISITORS TOTAL 35M 2010 2011 2012 2013 2014 2015 2016 CALENDAR YEAR

• Los Angeles County welcomed 47.3 million visitors in 2016, the sixth consecutive year of record-breaking visitation.

• The City is well on its way to achieving its goal of 50 million visitors by 2020 (and probably sooner!).

• Tourism is among the largest and healthiest contributors to the LA economy, bringing in $29.9 billion in direct spending and $33.6 billion in economic impact in 2016.

SOURCE: CTD, LATCB 3 TRANSIENT OCCUPANCY TAX GROWTH

TOT GENERAL FUND RECEIPTS COLLECTED BY CALENDAR YEAR

13.9% $250M

15.1%

YOY % INCREASE $200M 4.5% 14.4% $248.5M 10.7% $218.2M 14.9% $150M $189.5M $181.3M TOT IN MILLIONS TOT $158.5M $143.2M $124.6M $100M 2010 2011 2012 2013 2014 2015 2016 CALENDAR YEAR

• Transient Occupancy Tax (TOT) reached a record breaking $248.5 million in 2016, up 13.9% over 2015.

• TOT was the seventh largest top General Fund revenue source in Fiscal Year 2014-15, and had the highest year over year percentage growth.

SOURCE: CTD, OFFICE OF FINANCE 4 CITY OF LOS ANGELES LODGING METRICS

AVERAGE OCCUPANCY RATE BY CALENDAR YEAR AVERAGE DAILY RATE BY CALENDAR YEAR

85% 1.8% $200 1.6% 0.2% 11.0% 2.3% 80% $175 8.4% 82.2 7.5% 75% 80.6 80.8 $150 3.3% 181.13 79.3 160.13 77.5 150.48

DAILY RATE IN $ RATE DAILY 135.42 139.94

OCCUPANCY RATE OCCUPANCY 70% $125 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 CALENDAR YEAR CALENDAR YEAR

ROOM NIGHTS SOLD BY CALENDAR YEAR AVERAGE REVENUE PER AVAILABLE ROOM BY CALENDAR YEAR 13.0% 11.5M 1.8% $150 1.4% 8.8% 4.5% 11.0M $125 9.2% 5.7% 11.38M 148.96 1.2% 11.17M 10.5M 11.02M $100 131.85 110.97 121.22 10.43M 10.55M IN $ REVPAR 105.00 10.0M $75 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 CALENDAR YEAR CALENDAR YEAR ROOM NIGHTS IN MILLIONS

• City of Los Angeles hotels had a great year in 2016, with double-digit percent increases in both average daily rate (ADR) and revenue per available room (RevPAR), and the occupancy rate averaged above 80% for the third consecutive year.

• Among the top 25 U.S. markets, Los Angeles County had the highest year-over-year RevPAR growth (the most important lodging metric), with 10.8% in 2016.

SOURCE: CTD, LATCB 5 LACC PERFORMANCE

LACC EXHIBIT HALL OCCUPANCY RATE LACC ECONOMIC IMPACT

80% $600M

60% $400M

40% 72% $562.8M 65% 57% 60% $200M $410.8M 20% AVERAGE OCCUPANCY RATE OCCUPANCY AVERAGE DIRECT & INDIRECT SPENDING & INDIRECT DIRECT

0% $0M FY13 FY14 FY15 FY16 FY15 FY16 FISCAL YEAR FISCAL YEAR

• The Los Angeles Convention Center (LACC) is performing better today than at any time in its history.

• The LACC Exhibit Halls maintained an average occupancy of 72% during Fiscal Year 2015-16, 10.8% higher than the prior year. By industry standards, the “practical maximum” is 70%.

• As a result, the LACC has earned operational profits (revenues over expenditures) of approximately 18$ million in the first3.5 years of the P3 contract.

• During FY16, the LACC generated an estimated $562.8 million in economic impact, 37% higher than FY15.

SOURCE: CTD, LACC, LATCB 6 CONVENTION CENTER COMPARISON

CALENDAR YEAR 2014 LOS ANGELES SAN FRANCISCO ANAHEIM SAN DIEGO

CITYWIDE EVENTS 26 59 64 76 ROOM NIGHTS SOLD 197,037 1,018,422 471,256 673,955 AVG ROOM NIGHTS/EVENT 7,578 17,261 7,363 8,868

• Despite performing better than ever before, the LACC still has a significantly lesser economic impact when compared to the other major convention centers in California.

• The San Diego Convention Center, which is smaller than the LACC, attracts nearly three times as many major conventions than the LACC, which results in over three times as many room nights sold.

• San Francisco sells over five times as many room nights as LA, because they are booking bigger and better conventions, with over twice as many room nights per event.

• One of the primary reasons the LACC does not attract more major conventions is the significant lack of hotel rooms.

SOURCE: CTD, LATCB 7 ANALYSIS HOTEL ROOM SUPPLY IN COMPARABLE CITIES HOTEL ROOMS CONVENTION CENTER WITHIN 3/4 MILE This Hotel Market Study focuses on the Sports and 1 SAN FRANCISCO 21,570 Entertainment District of Downtown Los Angeles (DTLA), 2 NEW YORK 15,370 centered around the Los Angeles Convention Center, Staples 3 ANAHEIM 13,400 Center, Microsoft Theater and LA Live. 4 SEATTLE 10,660 5 SAN ANTONIO 10,540 • One of the major reasons the LACC has never been 6 SAN DIEGO 10,370 able to maximize its potential to attract more and larger 7 ATLANTA 9,860 conventions is the lack of hotel rooms. 8 ORLANDO 8,920 9 DENVER 8,670 • Los Angeles has a surprisingly small number of hotel rooms within walking distance of its convention center 10 WASHINGTON DC 8,530 when compared to other major cities. 11 LAS VEGAS 7,830 12 AUSTIN 7,560 • In 2013, with the creation of the Department of 13 INDIANAPOLIS 7,010 Convention and Tourism Development, the goal was 14 HOUSTON 6,780 established to have 8,000 hotel rooms opened or under 15 DALLAS 5,360 construction within walking distance of the LACC by 2020. At that time, there were 2,597 hotel rooms in this targeted 16 NASHVILLE 5,020 area. 17 NEW ORLEANS 4,670 18 LOS ANGELES 4,637 19 PHOENIX 3,450 20 BOSTON 3,110 21 LONG BEACH 2,560 SOURCE: CTD, JLL 22 CHICAGO 1,490 8 WEST COAST CITY HOTEL ROOMS BY DISTANCE

CONVENTION CENTER 1/4 MILE 1/2 MILE 3/4 MILE TOTAL

SAN FRANCISCO 3,290 7,470 10,810 21,570 ANAHEIM 4,430 5,470 3,590 13,400 SEATTLE 3,340 5,480 1,840 10,660 SAN DIEGO 2,120 5,120 3,130 10,370 LOS ANGELES 0 2,204 2,433 4,637

• The number and proximity of hotel rooms are major factors when trying to attract large national conventions, which provide the greatest economic impact.

• The closer the hotels are to the convention center, the better it is for the customer. Industry standard is that most conventioneers won’t walk more than ¾ mile.

• An on-site headquarters hotel would be ideal, but for physical and legal reasons, that does not appear to be feasible.

• Los Angeles needs to particularly focus on hotels within ½ mile radius of the LACC.

SOURCE: CTD, JLL 9 WEST COAST CITY HOTEL ROOMS BY RATING

CONVENTION CENTER LUXURY UPSCALE SELECT SERVICE TOTAL

SAN FRANCISCO 5,570 13,180 2,630 21,570 ANAHEIM 0 8,330 5,070 13,400 SEATTLE 2,250 7,160 1,250 10,660 SAN DIEGO 2,060 7,230 1,080 10,370 LOS ANGELES 1,890 1,585 1,162 4,637

• To be successful, a convention center (and the entire downtown area) needs to provide hotel rooms at every price point, from luxury to budget.

• Within the industry, Smith Travel Research (STR) is commonly used to differentiate seven ratings, or chain scales: Luxury, Upper Upscale, Upscale, Upper Midscale, Midscale, Economy and Independent. For the pur- pose of this report, these scales were consolidated into three categories: luxury, upscale, and select service.

• Los Angeles needs to focus on getting more rooms in every category.

SOURCE: CTD, JLL 10 WEST COAST CITY HOTEL ROOMS BY RATING

LOS ANGELES - EXISTING LOS ANGELES - 2019

19% SELECT/OTHER 17% 40% 40% UPSCALE 41% 43% LUXURY

SAN DIEGO ANAHEIM SAN FRANCISCO SEATTLE

10% 12% 12% 20% 38% 27% 21%

70% 62% 61% 67%

• As shown above, the area lacks upscale hotels, which are particularly necessary to support the LACC.

• Even when taking into consideration the hotels which are currently under construction and will be open by 2019 (Park Hyatt, Trinity Esplendor, and the Proper Hotel), this critical segment will still be underrepresented.

• Los Angeles should expect to have at least 50% of the hotel mix serving the LACC be upscale.

SOURCE: CTD, JLL 11 HOTEL MEETING SPACE IN COMPARABLE CITIES

MEETING ROOM CONVENTION CENTER SQUARE FEET WITHIN 3/4 MILE 1 SAN FRANCISCO 759,300 • The area surrounding the LACC also has a surprisingly 2 ORLANDO 608,900 small amount of self-contained meeting space within the 3 ATLANTA 583,800 nearby hotels. 4 SAN DIEGO 498,300 • Such meeting space is very beneficial to the LACC as well 5 DENVER 468,200 as the Downtown business community. 6 ANAHEIM 447,500 7 SAN ANTONIO 436,800 • Another factor which makes the San Diego Convention Center more successful is that its nearby hotels have over 8 DALLAS 405,700 250% more meeting space than the LACC’s hotels. 9 HOUSTON 392,100 10 AUSTIN 378,300 • To be competitive, Los Angeles should have large hotels 11 INDIANAPOLIS 370,100 with significant meeting space. Large conference hotels will 12 BOSTON 350,200 typically have 75 to 100 square feet of meeting space for each hotel room. For example, a 1,000-room hotel should 13 SEATTLE 319,000 have 75,000 to 100,000 square feet of meeting space. 14 WASHINGTON DC 309,000 15 LAS VEGAS 299,400 16 NASHVILLE 253,600 17 LOS ANGELES 221,151 18 NEW ORLEANS 210,000 19 PHOENIX 182,300 20 LONG BEACH 137,900 21 NEW YORK 134,400 SOURCE: CTD, JLL 22 CHICAGO 49,100 12 EXISTING HOTELS WITHIN 3/4 MILE OF THE LACC

STR MEETING SPACE KEY HOTEL ROOMS DISTANCE RATING SQUARE FEET 1 InterContinental Los Angeles Downtown 889 0.74 luxury 66,540 2 JW Marriott Los Angeles LA Live 878 0.30 luxury 77,000 3 Sheraton Los Angeles (The Bloc) 485 0.69 upscale 20,172 4 Hotel Indigo 350 0.46 upscale 11,000 5 Figueroa Hotel 285 0.39 upscale 7,764 6 Stillwell Hotel 232 0.61 select 5,000 7 Freehand Hotel & Hostel 226 0.74 select 13,000 8 Residence Inn Los Angeles LA Live 219 0.34 upscale 4,500 9 Mayfair Hotel 215 0.74 select 3,725 10 Ace Hotel 182 0.67 upscale 6,000 11 Luxe City Center Hotel 175 0.31 upscale 6,000 12 Courtyard Los Angeles LA Live 174 0.34 upscale 0* 13 Ritz Milner 137 0.60 select 300 14 Ritz-Carlton Los Angeles LA Live 123 0.30 luxury 0** 15 O Hotel 67 0.59 select 150 SUBTOTAL 4,637 221,151 *Shared meeting space with the Residence Inn Los Angeles LA Live **Shared meeting space with the JW Marriott Los Angeles LA Live

SOURCE: CTD, JLL 13 THE AREA’S NEWEST HOTELS

INTERCONTINENTAL HOTEL, WILSHIRE GRAND CENTER DEVELOPER: KOREAN AIR LOT SIZE: 2.708 ACRES HEIGHT: 1 TOWER, 73 STORIES HOTEL: 889 ROOMS RESIDENTIAL: NONE RETAIL: 45,000 SQ FT OFFICE: 360,000 SQ FT

HOTEL INDIGO, METROPOLIS DEVELOPER: GREENLAND USA LOT SIZE: 6.275 ACRES HEIGHT: 4 TOWERS, 18-56 STORIES HOTEL: 350 ROOMS RESIDENTIAL: 1,558 CONDOS RETAIL: 74,000 SQ FT OFFICE: NONE

FREEHAND HOTEL AND HOSTEL DEVELOPER: SYDELL GROUP LOT SIZE: 0.207 ACRES HEIGHT: 13 STORIES HOTEL: 226 ROOMS RESIDENTIAL: NONE RETAIL: 500 SQ FT OFFICE: NONE

14 EXISTING HOTELS WITHIN 3/4 MILE OF THE LACC

KEY HOTEL ROOMS

1 InterContinental Los Angeles Downtown 889 2 JW Marriott Los Angeles LA Live 878 3 Sheraton Los Angeles (The Bloc) 485 4 Hotel Indigo 350 5 Figueroa Hotel 285 6 Stillwell Hotel 232 7 Freehand Hotel & Hostel 226 8 Residence Inn Los Angeles LA Live 219 9 Mayfair Hotel 215 10 Ace Hotel 182 11 Luxe City Center Hotel 175 12 Courtyard Los Angeles LA Live 174 13 Ritz Milner 137 14 Ritz-Carlton Los Angeles LA Live 123 15 O Hotel 67 SUBTOTAL 4,637

15 HOTELS UNDER CONSTRUCTION

STR MEETING SPACE KEY HOTEL ROOMS DISTANCE RATING SQUARE FEET 16 Broadway Trade Center (Waterbridge) 200 0.74 tbd - 17 Esplendor Trinity Hotel 183 0.60 upscale 10,000 18 Park Hyatt (Oceanwide Plaza) 183 0.18 luxury 10,000 19 The Downtown LA Proper (Case Hotel) 151 0.56 upscale - SUBTOTAL 717 20,000

BROADWAY TRADE CENTER ESPLENDOR TRINITY HOTEL DEVELOPER: WATERBRIDGE CAPITAL DEVELOPER: CHETRIT GROUP LOT SIZE: 2.774 ACRES LOT SIZE: 0.601 ACRES HEIGHT: 16 STORIES HEIGHT: 8 STORIES HOTEL: 200 ROOMS HOTEL: 183 ROOMS RESIDENTIAL: NONE RESIDENTIAL: NONE RETAIL: 200,000 SQ FT RETAIL: TBD OFFICE: 400,000 SQ FT OFFICE: NONE

PARK HYATT THE DOWNTOWN LA PROPER DEVELOPER: OCEANWIDE DEVELOPER: PROPER HOSPITALITY LOT SIZE: 4.624 ACRES LOT SIZE: 0.207 ACRES HEIGHT: 3 TOWERS, 40-49 STORIES HEIGHT: 13 STORIES HOTEL: 183 ROOMS HOTEL: 151 ROOMS RESIDENTIAL: 504 CONDOS RESIDENTIAL: NONE RETAIL: 166,000 SQ FT RETAIL: TBD OFFICE: NONE OFFICE: NONE

16 HOTELS EXISTING & UNDER CONSTRUCTION

KEY HOTEL ROOMS

17 PROPOSED HOTELS

STR MEETING SPACE KEY HOTEL ROOMS DISTANCE RATING SQUARE FEET 20 Fig+Pico Conference Center Hotels (Lighstone) 1,162 0.06 select - 21 City Lights on Fig (TriCal Construction) 1,024 0.08 tbd - 22 JW Marriott Expansion 755 0.30 luxury 57,000 23 dtLA South Park 300 0.36 tbd - 24 Toyota Site (L&R Group of Companies) 250 0.29 tbd - 25 Cambria Hotel & Suites (PPP) 247 0.43 upscale - 26 Figueroa Centre (Regalian, LLC) 220 0.43 luxury - 27 The Reef (LA Mart) 208 0.75 select - 28 Home2 Suites 143 0.74 select - 29 W Hotel (Figueroa North, Hazens) 125 0.31 luxury 16,000 SUBTOTAL 4,434 73,000

• With the leisure, convention and business travel continuing to boom, there has been a lot of interest expressed in future hotel development projects.

• All of these above projects have submitted actual plans to the City and have been accepted by the Planning Department.

• These projects are proposals, and as such, it is unlikely that all the above projects will be built as proposed.

• With 4,637 existing hotel rooms and 717 rooms currently under construction, the area “only” needs 2,646 to reach the goal of 8,000 rooms.

18 PROPOSED HOTEL HIGHLIGHTS

CITY LIGHTS ON FIG JW MARRIOTT EXPANSION DEVELOPER: TRICAL CONSTRUCTION DEVELOPER: AEG LOT SIZE: 0.830 ACRES LOT SIZE: 1.368 ACRES HEIGHT: 53 STORIES HEIGHT: 38 STORIES HOTEL: 1,024 ROOMS HOTEL: 755 ROOMS RESIDENTIAL: NONE RESIDENTIAL: NONE RETAIL: TBD RETAIL: 17,800 SQ FT OFFICE: NONE OFFICE: NONE

W HOTEL FIG + PICO CONFERENCE CENTER HOTELS DEVELOPER: SHENZHEN HAZENS MOXY + 2 BRANDS TO BE NAMED LOT SIZE: 2.661 ACRES DEVELOPER: LIGHTSTONE HEIGHT: 2 TOWERS, 29-38 STORIES LOT SIZE: 1.220 ACRES HOTEL: 300 ROOMS HEIGHT: 2 TOWERS, 25-42 STORIES RESIDENTIAL: 485 CONDOS HOTEL: 1,162 ROOMS RETAIL: 80,000 SQ FT RESIDENTIAL: NONE OFFICE: NONE RETAIL: 13,100 SQ FT OFFICE: NONE

19 PROPOSED HOTEL HIGHLIGHTS

CAMBRIA HOTEL & SUITES DEVELOPER: PACIFIC PROPERTY PARTNERS LOT SIZE: 0.319 ACRES HEIGHT: 18 STORIES HOTEL: 247 ROOMS RESIDENTIAL: NONE RETAIL: 17,800 SQ FT OFFICE: NONE

TOYOTA SITE DEVELOPER: L&R GROUP OF COMPANIES LOT SIZE: 0.507 ACRES HEIGHT: 52 STORIES HOTEL: 250 ROOMS RESIDENTIAL: 336 UNITS RETAIL: 8,500 SQ FT OFFICE: NONE

FIGUEROA CENTRE DEVELOPER: REGALIAN, LLC LOT SIZE: 1.910 ACRES HEIGHT: 66 STORIES HOTEL: 220 ROOMS RESIDENTIAL: 200 CONDOS RETAIL: 94,000 SQ FT OFFICE: NONE

20 KEY HOTEL ROOMS 1 889 HOTELS EXISTING, UNDER CONSTRUCTION & InterContinental Los Angeles Downtown PROPOSED 2 JW Marriott Los Angeles LA Live 878 3 Sheraton Los Angeles (The Bloc) 485 4 Hotel Indigo 350 5 Figueroa Hotel 285 6 Stillwell Hotel 232 7 Freehand Hotel & Hostel 226 8 Residence Inn Los Angeles LA Live 219 9 Mayfair Hotel 215 10 Ace Hotel 182 11 Luxe City Center Hotel 175 12 Courtyard Los Angeles LA Live 174 13 Ritz Milner 137 14 Ritz-Carlton Los Angeles LA Live 123 15 O Hotel 67 16 Broadway Trade Center (Waterbridge) 200 17 Esplendor Trinity Hotel 183 18 Park Hyatt (Oceanwide Plaza) 183 19 The Downtown LA Proper (Case Hotel) 151 20 Fig+Pico Conf. Center Hotels (Lighstone) 1,162 21 City Lights on Fig (TriCal Construction) 1,024 22 JW Marriott Expansion 755 23 dtLA South Park 300 24 Toyota Site (L&R Group of Companies) 250 25 Cambria Hotel & Suites (PPP) 247 26 Figueroa Centre (Regalian, LLC) 220 27 The Reef (LA Mart) 208 28 Home2 Suites 143 29 W Hotel (Figueroa North, Hazens) 125 TOTAL 9,788 21 NEW HOTEL ABSORPTION

HOTEL ROOMS OPENING DATE

JW MARRIOTT LOS ANGELES L.A. LIVE 878 February 2010 RITZ CARLTON LOS ANGELES L.A. LIVE 123 February 2010 RESIDENCE INN LOS ANGELES L.A. LIVE 219 may 2014 COURTYARD LOS ANGELES L.A. LIVE 174 may 2014 FREEHAND HOTEL AND HOSTEL 226 june 2017 INTERCONTINENTAL LOS ANGELES DOWNTOWN 889 july 2017 BROADWAY TRADE CENTER 200 est. 2018 ESPLENDOR TRINITY 183 est. 2018 DOWNTOWN LA PROPER 151 est. 2018 PARK HYATT 183 est. 2019 CAMBRIA HOTEL & SUITES 247 est. 2019

• It is widely agreed that the area serving the LACC needs more hotel rooms, however, it is a separate matter to predict how fast the market can absorb the additional room supply as it comes online.

• Ultimately, market conditions, not the City, will determine the pace. Hotel developers, operators and finan- ciers will not build new hotels unless and until they are convinced the market will support them based on normal supply and demand.

• Up to this point, occupancy and average daily rate have remained strong as new hotel supply has come on the market, indicating supply has not yet exceeded demand.

22 RECOMMENDATIONS As the City closes in on its goal of 8,000 hotel rooms open or under construction within walking distance of the LACC by 2020, particular focus should be given to certain specific strategies:

PROXIMITY

• All hotels built within the ¾ mile radius would be beneficial, with those within the targeted area shown in green on the map being the most beneficial.

• Enough sites still remain available within this targeted area. Seven of the proposed hotels noted earlier, totaling 3,783 rooms, fall within this area and have already submitted plans to the City. While this is more than enough to reach 8,000 rooms, it is not likely all will be built as proposed due to normal market dynamics.

• Going forward, it is essential that as many of these sites in the targeted area as feasible be developed with hotels, in order to capture the jobs and tax revenues created by these large commercial projects.

23 RATINGS

• It is important for the success of the Sports and Entertainment District to have hotels for every price point. The LACC is particularly underserved by large, upscale hotels when compared to other major convention cities.

• Upscale hotel developers and operators have an inherent interest in being located in the very dynamic Downtown Los Angeles Sports and Entertainment District.

• Going forward, to be competitive, the City should expect to have at least 50% of the targeted total of 8,000 hotel rooms be upscale.

MEETING SPACE

• With or without the expansion of the LACC, the area needs large, upscale hotels, with a proportionate amount of self-contained meeting space, typically 75 to 100 square feet of meeting space per hotel room.

• Large, full-service hotels are the best vehicles for delivering the significant meeting space which is essential for the LACC and the broader business community.

• Going forward, the City should strive to attract at least one additional full-service headquarters hotel with 75 to 100 square feet of meeting space per hotel room.

24 TOOLS

• The LACC, Staples Center, LA Live, and the JW Marriott/Ritz Carlton hotels were developed with varying degrees of assistance from the Los Angeles Redevelopment Agency, which no longer exists. As a result, the City does not have as many tools available today to implement the City’s vision for any such targeted areas.

• Going forward, the City should consider using the tools which it still has, such as: • The continued judicious reinvestment of net new site specific tax revenues, such as Transient Occupancy Tax, in Public Private Partnerships (P3) to promote the development of high priority hotel projects. • The smart use of City land use discretionary approvals to make sure the projects being considered are consistent with the City’s planning and urban design for this area.

INFRASTRUCTURE

• Even when the City achieves its goal of 8,000 hotel rooms within walking distance of the LACC, it will still have far fewer rooms than most other major convention cities.

• Going forward, the City should promote key infrastructure projects which will improve transportation and connectivity between the Sports and Entertainment District and other hotels and venues in Downtown and throughout the City, such as: • Expand and improve the Metro Pico Station; • Seek accelerated funding to construct the LA Streetcar Project; and • Complete the MyFigueroa street enhancement project.

25 CONCLUSION

• Many factors have contributed to the dramatic economic resurgence of Downtown Los Angeles, but perhaps no development has been a bigger ‘spark plug’ than the success of the Staples Center, the reinvigorated Convention Center and LA Live as the heart of the Sports and Entertainment District.

• There are many indications that prosperity will continue, with overall growth in tourism and business travel (particularly from Asia).

• However, with the continually strengthening economy, there is also increased competition nationally, particularly on the West Coast with Seattle, San Francisco, Anaheim and San Diego also enjoying robust growth in the leisure and hospitality sector.

• The Downtown Sports and Entertainment District cannot afford to rest on its laurels. The status quo never lasts - every day, every market area is either getting stronger or weaker.

• This report pointed out the need for more hotels and meeting space in the Sports and Entertainment District when compared to its major competitor cities, and put forward specific recommendations on how to reach the goal of 8,000 hotel rooms open or under construction by 2020.

• When that goal of 8,000 rooms was set in 2013, it seemed like a stretch, because only 2,597 rooms existed at the time. With 4,637 rooms now open and another 717 under construction, the targeted area will soon have 5,354 rooms, or 67% of its goal. That goal is now clearly within reach!

• In order to achieve that goal, the report makes specific recommendations which could be implemented, including the continued judicious reinvestment of net new site specific tax revenues, such as Transient Occupancy Tax, in Public Private Partnerships (P3) to promote the development of high priority hotels.

• More than ever, the City needs to continue to provide strong leadership to achieve the vision of the Sports and Economic District as a strong economic engine for Downtown and all of Los Angeles.

26 ABOUT COUNCIL DISTRICT 14

The 14th Council District is home to more than 246,000 residents and encompasses some of the oldest and most historic neighborhoods in the City of Los Angeles. Covering such communities as Eagle Rock, Highland Park, Glassell Park, El Sereno, Boyle Heights, and Downtown Los Angeles, it is one of the most culturally diverse districts in the City.

ABOUT COUNCILMEMBER HUIZAR

Councilmember José Huizar was first elected to the Los Angeles City Council in2005 . A Complete Streets champion, Huizar has brought major improvements to the public walkways, spaces and thoroughfares of his district and the entire City, prioritizing pedestrian, bicyclist and public transit users as much as automobiles. Huizar is one of the City’s most proactive elected officials in pursuing creative solutions to address homelessness. The Councilmember worked with Los Angeles County officials to create an intensive five-days-a-week medical, housing, rehabilitative, and social service outreach program in Skid Row (C3), which is now the model for the entire County; he helped create the nation’s first permanent large- city committee to address homelessness; and he co-authored the $1.2 billion homeless housing bond, the largest city bond in history. Prior to his election to the City Council, Councilmember Huizar served as President of the Board of Education for the Los Angeles Unified School District and oversaw the largest school construction project in U.S. history. Born in Zacatecas, Mexico, Councilmember Huizar is the first Mexican immigrant elected to the Los Angeles City Council. He received degrees from the University of California, Berkeley; Princeton University; and UCLA. He resides in Boyle Heights with his wife, Richelle, and their children: Emilia, Isabella, Simon and Aviana.

CONTACT US 200 N. Spring Street, Room 465 Los Angeles, CA 90012 P: (213) 473-7014 F: (213) 847-0680 [email protected] josehuizar.com

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