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West Hollywood mayor wants a moratorium on new hotels

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Could the city end up with too many rooms?

West Hollywood Mayor Lauren Meister will call upon the City Council Monday to place a moratorium on hospitality projects, fearing the economic effects of a surplus of hotel rooms, Wehoville reports.

Meister’s concerns stem from a report issued last year by CBRE Hotels and PKF Consulting, which was initiated by the council in 2015. It suggests that allowing all hotel projects in the planning pipeline to come to fruition could have a significant effect on occupancy rates.

The report shows that occupancy rates have improved from about 73 percent in 2010 to more than 80 percent in recent years. Average daily rates have also climbed from $209 to around $280 in 2015.

That’s bad news for travelers, but great news for officials: The city relies heavily on taxes charged to hotel guests as a revenue generator for its general fund.

But hotel projects planned or under construction would add 1,229 rooms to West Hollywood, an increase of nearly 60 percent over the 2,060 rooms that exist right now.

That would likely result in more vacant rooms: The report predicts occupancy rates could dip below 70 percent by 2020 (eventually crawling back up to current rates by 2026). The question is whether more rooms and higher prices (the hotels now in development aren’t exactly of the economy variety) will make up for those empty beds.

On that point, the report is actually optimistic, predicting a slight increase in revenue per available room over 2015 levels. But Meister tells Wehoville that she’s worried the report does not take into account important factors such as the construction of major hotel projects in neighboring communities such as Beverly Hills.

An economic downturn could also reduce demand, leading to even lower occupancy rates and lower prices as more projects open for business.

Meister will ask the council to commission a new study examining these factors and others.

In the meantime, if the council agrees to a moratorium, the fate of several major projects would be called into question. These include a Pendry hotel planned for the Sunset Strip, a 169-room establishment at 8950 Sunset, and a hotel called Robertson Lane set to rise on the site of the historic Factory nightclub.