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Opulent Openings

Deluxe Hotels Check In as Economy Checks Out

Los Angeles Business Journal Staff

Doormen welcome visitors at the new Montage Beverly Hills.
Doormen welcome visitors at the new Montage Beverly Hills.
It’s the first ultra high-end hotel to open in Los Angeles in 17 years. As a result, the Montage Beverly Hills is causing a stir among other top-tier luxury hospitality establishments.

The Montage – complete with a two-story spa and the complementary use of a Mercedes-Benz for some guests – increases the number of rooms in L.A.’s top-end hotel market, where standard room rates start at $500 a night, by 25 percent.

What’s more, the segment just below the Montage – where room rates start in the $400 to $500 range – is seeing a bigger bulge. The SLS Hotel at Beverly Hills opened two weeks ago, and a W Hotel in Hollywood and a Ritz Carlton at the L.A. Live complex downtown are under construction. Those three hotels will expand their pricey market segment by 53 percent.

Indeed, Los Angeles has not seen such a surge in high-end inns for decades. And those rooms are now starting to come on the market just as the economy is checking out.

Driven by the need to stand out from the competition and expand clientele at a time of economic uncertainty, hotels are offering guests some extra-special perks.

At the nearby Peninsula Beverly Hills hotel, which opened in 1991 and was for a long time L.A.’s only five-star hotel, has started offering perfumed rooms and luxury treatment for guests’ dogs. (See related article.)

Raffles L’Ermitage Beverly Hills has begun offering free transportation to and from local airports for all guests, as well as the use of a Ferrari, Bentley or Lamborghini for guests staying in the highest-priced suites.

The Four Seasons Beverly Hills is planning to renovate its rooms and pool area next year. Along with the Beverly Wilshire, which is also a Four Seasons property, the hotel is offering a third night free for every two paid nights.

And the Montage, which opened Nov. 17, kept its prices lower than they could have been – even though rates shoot up to $7,500 a night for the presidential suites. The hotel also offers promotional packages, said Ali Kasikci, who left the rival Peninsula to become the Montage’s managing director. But that’s not because he’s worried about filling the rooms.

“We are competitively priced and have taken into account economic conditions, but we didn’t want to panic because of what has happened in the last few weeks,” he said. “The dollar is the same dollar to everyone, and the affluent are affected by the economy, too. But we wanted to price appropriately for the market. There’s no ‘panic, panic.’ ”

Other hotel managers are watching the Montage with interest.

“What Ali Kasikci does at the Montage is going to raise the bar for the rest of us in this town,” said Jack Naderkhani, general manager of Raffles L’Ermitage. “But when it comes to the other properties, it’s not what we do better, but what we do differently. We don’t have to lower rates to get guests to come. We add value.”

Forecasters see the hospitality sector struggling through 2009, and the luxury sector won’t be immune.

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