Workers await word
WILSHIRE BOULEVARD — Union officials representing more than 220 hotel employees here are closely monitoring the pending sale of the Fairmont Miramar to see who the new owner will be and what impact they may have on future contract negotiations.
Kurt Petersen, organizing director of UNITE HERE Local 11, the union representing 225 employees of the Miramar, said a contract between his members and the current owners of the hotel, St. Louis-based hotel investment firm Maritz, Wolff & Co., expires in November.
That opens the door for a new round of contract talks, which may not be as beneficial for the union as in years past as the new owner may look to cut back on spending to try and recoup their significant investment, which will most likely include the renovation of the hotel’s 302 rooms and common areas to turn it into a five-star establishment.
Lewis N. Wolff, co-owner of the hotel, said in an interview Friday that the Miramar, originally the home of Santa Monica founder Sen. John P. Jones, should fetch around $210 million, making it one of the most expensive hotel purchases in California, with a per-room price tag of nearly $700,000.
Wolff declined to name the buyer selected, however, he said that the finalists in the bidding war had shown an interest in working closely with the union and their members to keep things running smoothly.
The sale is in final negotiations, though it has not entered escrow.
“All the bidders were extremely honorable,” said Wolff, who along with partner Philip F. Maritz, purchased the Miramar eight years ago for approximately $90 million, contributing an additional $25 million for renovations to the hotel’s bungalows, a favorite of Hollywood’s elite during the 1920s. “We didn’t put any conditions on the sale, but we said that if it was at all possible, we’d like to see the retention of all our employees and Fairmont as the manager (of the hotel),” Wolff said.
Fairmont currently manages the hotel for Wolff and company, and is expected to remain once the sale is approved.
“I really like our employees,”Wolff added. “They’re hardworking, decent people and I wanted to make sure that whomever we selected followed the traditions we started and tried to maintain here. I think all of the buyers agreed to that. It’s just hard to put that down on paper … I think the sale will be approved and be seamless as far as the employees and the union.”
Petersen said he expects to build a strong and positive working relationship with the new owner. However, the union will be ready to protect the benefits its members receive, including complete health care coverage for family members, a pension, paid vacation time, greater job security and the option of negotiating one’s workload.
“The workers have been here for many years and they are dedicated to the hotel and they expect the new management to receive them with open arms so we can continue to be productive employees,” Petersen said. “We’re a little amiss that we haven’t heard from the new owner yet or from the current owner.
“We’re being optimistic, but ready for whatever comes our way.”
Steve Gold, president of Hotel Financial Strategies, said the hotel will not be able to function properly if a strong relationship is not established with unionized employees.
“The advantage of operating a larger, five-star hotel is that those (employee costs) are of a percentage of income much smaller than if you were in a smaller dollar per night hotel,” Gold said.
Room rates at the Miramar range from $299 to $899 a night.
Wolff said he and his partner had always planned to sell the hotel along with others in their real estate portfolio.
“The market has reached a point where we felt it as appropriate to sell in terms of getting the best return on our investment,” Wolff, a resident of Los Angeles, said. “We are not in the hotel business in the sense of being a management company. That’s why we have Fairmont.”
Wolff said he and his partner sold their Fairmont-managed hotel in Kansas City, Mo., and a Four Seasons in Austin, Tex.
The Miramar is able to fetch such a high asking price because of its unique location, size and reputation, said Gold, a financial planner who has worked with the hotel industry for more than 30 years.
“We’re talking about a significant piece of land overlooking the ocean,” Gold said. “It’s not on the beach, but it has some great views. It’s a gorgeous piece of land.”
Gold said the time is right to sell as land values have skyrocketed. Interests rates are also low, giving buyers more incentive to invest. The lower rates provide an opportunity to make things work economically for buyers even though they are spending a considerable amount of money on the initial purchase.
“If you could build hotels all over Santa Monica, that would be one thing. But you can’t,” Gold said.
Whomever the new owner is, they should have no trouble making money as Santa Monica is one of the premier destinations in Southern California, with a hotel room occupancy rate far above those in other areas.
Misti Kerns, executive director, said the occupancy rate for April was 82.3 percent, with the average room going for $256 a night.
“That’s pretty good,” Kerns said of the occupancy rate, which fluctuates with the seasons.
It is difficult to speculate on what impact the sale of the Miramar will have on Santa Monica’s tourism industry and the local economy, Kerns said. She hopes the new owner will retain the existing staff along with the look and feel of the Miramar, a property “near and dear” to residents. “(The employees) have done a good job running the hotel from a numbers standpoint and they have certainly been a good compliment to the community and fit in well,” Kerns said.
While details are still sketchy as to the future of the Miramar, one thing is for certain — Wolff will continue to send his grandchildren there when they come to Los Angeles to visit.
“It was and continues to be a very popular place, almost like an urban resort,” Wolff said. “I mean, when my grandchildren come to town, I have them stay there rather than at the house because they are so close to the beach, shopping on the Promenade. You can do all that and more. We’ll continue to go there. We’re not planning to stop.”
Originally published in the Santa Monica Daily Press print edition on July 8, 2006. Read the original PDF.