Falor Cos. has agreed to buy the 188-room Hilton Checkers hotel in downtown Los Angeles for about $28 million, according to sources briefed on the deal.
Chicago-based Falor owns mostly boutique properties that have been converted into condo hotels, where the rooms are sold to private investors but are rented out when the owner is away.
Falor has similar plans for the Hilton Checkers, located at 535 S. Grand Ave., sources said. Falor officials couldn't be reached for comment.
Kor Group Inc., which owns the Viceroy in Santa Monica and the Sheraton Gateway LAX, among other properties, is in negotiations with Falor to take the hotel's management contract from Beverly Hills-based Hilton Hotels Corp.
Lynn Kozlowski, a spokeswoman for Tarsadia Hotels, which owns the property, said the company wouldn't comment.
Condo hotels have gained in popularity over recent years nationally, though few are operating in Los Angeles County, according to Neale Redington, national partner in charge of the hospitality division at Deloitte & Touche.
"It's a fairly new concept," Redington said. "It's been very popular in New York but it's just starting to pop up here in Los Angeles."
At the price Falor is paying, the purchase would break down to about $150,000 per room, far above the $78,000 a room an unidentified investor is paying for the Hyatt Regency Los Angeles.
Political opposition to the sale is unlikely since condo hotels continue to pay city taxes on rented hotel rooms and they usually retain the existing workforce, which is still needed to run the hotel operation.
Typically, the hotel room owner and the property's management company evenly split revenues derived from renting out the room, Redington said.
"The owner has a way to defray holding costs of the room," he said. "And the hotel's developer or manager finds people to use the rooms and generates fees for that service."
FindArticles > Los Angeles Business Journal > Nov 15, 2004 > Article > Print friendly
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