Investment

Los Angeles considers new hotel for updated convention center and new arena

13 May, 2014 By: Elliott Mest
 


Officials in Los Angeles have begun preparations for the construction of a 1,000-room hotel on city-owned property that will connect to the city's Convention Center.

According to the Los Angeles Times, developer Anschutz Entertainment Group (AEG) has been approached to build a 72,000-seat stadium located between the stadium and nearby freeway, with a portion of the stadium's proceeds dedicated to the expansion and upgrade of the convention center. 

The stadium is being built in hopes of attracting an NFL team to the city, and a 2012 agreement between AEG and the city agreed that the convention center's 43-year-old West Hall would be demolished and replaced by Farmers Field, the new stadium. That plan places debt payments on a new $287-million wing for the convention center, which would be covered by parking taxes, lease income, property taxes and a one-time construction tax.

"Although building this project with an NFL stadium has always been our top priority, we share the city's objective of modernizing and expanding the Convention Center and are cooperating with city officials to offer our input and assistance to identify a feasible Plan B should one be needed," AEG spokesman Michael Roth told the Los Angeles Times. AEG currently has a contract with the city to run the facility.

The development of a hotel to assist the convention center is also necessary, as downtown Los Angeles has been choked in recent years by high demand and low room supply. Testament to this is the recent sale of a small plot of land across from L.A. Live, which harbored a humble car wash and recently was purchased by Los Angeles landlord Ben Neman for an estimated $25 million.

According to the Los Angeles Times, Robert Bush, the original owner of the car wash, purchased the land for $525,000 in 1980, as has been approached multiple times in the past to sell the land. Nehman envisions a hotel and luxury condominiums as potential future projects for the space.

A cause of concern is that the pact between AEG and the city is set to expire in just eight months, forcing the city to look at other strategies to boost tourism and renovate the convention center. Fortunately, according to the Los Angeles Daily News, tourism is up in the city, with its tourism sector having a record year for the third year in a row during 2013.

Last year, the county hosted 42.2 million visitors, who collectively spent $18.4 billion during their stay, an increase of 5.5 percent over the $17.4 billion spent in 2012.

“[Tourism] is one of the sectors that offers the local economy tremendous potential,” Robert Kleinhenz, chief economist at the Kyser Center for Economic Research in Los Angeles, told the Los Angeles Daily News. “I think there is an awful lot of upside to the industry here in the region, not just Los Angeles County.”


External Source : Los Angeles Times, Los Angeles Daily News, Los Angeles Times

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