148-room Proper to join ranks of boutique hotels in downtown L.A.

Travelers to cities with thriving downtowns, such as New York and San Francisco, have long been familiar with one-of-a-kind boutique hotels, but downtown Los Angeles has long been ruled by big chains selling soothing predictability.

That pattern is finally changing as L.A.’s city center becomes a place more people want to visit — and where investors want to make money.

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FOR THE RECORD:
Downtown hotel: In the July 7 Business section, an article about a boutique hotel being built in downtown Los Angeles gave its name as the Proper. The full name is Downtown L.A. Proper Hotel.
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The latest example is a historic 13-story tower on Broadway that is being converted to a hotel called the Proper. The 148-room Proper will be two blocks south of the popular Ace Hotel, a former 1920s office building that opened last year and was sold recently for $103 million, reaping a tidy profit for its developers.

Downtown’s hotel market is thriving after years of mediocre performance, and that has developers racing to get into the niche of boutique, or “lifestyle,” hotels.

A growing number of customers are seeking hotels with flair and inviting communal spaces, said Sara Lo, a senior manager specializing in the hospitality business at consulting firm Ernst & Young.

“The shift now is not toward just renting a room where one is going to sleep, it’s going where there is nightlife,” she said.

The trend is thriving in metropolitan areas. Big cities including New York, Chicago, Miami, San Francisco and Los Angeles have more than 60% of the country’s supply of lifestyle hotel rooms, Lo said.

There are more than 15 lifestyle hotels on the Westside, particularly in Santa Monica and West Hollywood, but downtown so far has only the Ace and the Standard, which occupies a former office building in the financial district. Construction on the Proper is scheduled to begin in the next few months and be completed by 2017.

A handful of other boutique hotels are in the pipeline for downtown, including two ongoing renovations of former 1920s office buildings by New York developer Sydell Group.

For many years, downtown hotels served mostly business travelers and conventioneers. With its burgeoning restaurant and entertainment scene, downtown is becoming a destination for people traveling in their leisure time, and those people often prefer distinctive lifestyle hotels, Lo said.

Although some lifestyle hotels, such as the Standard, emerged as a stylish low-cost alternative for young travelers, they now draw guests of all ages and are commanding a growing share of the hotel business.

In several big U.S. cities, such hotels account for more than half the market, Lo said. Big chains have embraced the trend by creating their own boutique brands such as Canopy by Hilton Hotels & Resorts, W by Starwood Hotels & Resorts and Edition by Marriott International Inc.

A 350-room Indigo, the boutique brand of InterContinental Hotels Group, is under construction as part of the $1-billion Metropolis condominium and retail complex being built north of Staples Center downtown.

“As more things go on downtown, there will be more and more leisure travelers there,” she said.

Proper Hospitality — a new Los Angeles company launched by the founders of Viceroy Hotel Group and Los Angeles commercial property developer the Kor Group — is looking to capture of a piece of that business.

Proper and its partners bought the vacant Case Hotel, a once-grand structure clad in red brick and stone masonry that towers over its neighbor across Broadway: the former headquarters of the Herald-Examiner newspaper.

The Case Hotel was built in the mid-1920s to be the home of the Commercial Club of Southern California, a business booster group. Plans for the Italian-Renaissance-style building called for shops at street level, The Times reported in 1924. Women were to have a private elevator to the second and third floors, where they could eat, get their hair done or stay overnight.

The rest of the floors were reserved for men, with a large dining room on the fourth floor. Other floors were to have a lounge, a library, a billiard room, a swimming pool, a gymnasium with locker room and a barber shop. There were to be more than 50 rooms “for the members who wish to live in the building,” The Times said.

In 1947, the building at 1106 S. Broadway was converted to the Case Hotel, which operated until the YWCA Job Training Corps set up operations there in 1965. The YWCA moved to a new property several blocks away in early 2012, and the property has been vacant since then.

Many lifestyle hotels are pitched to budget-conscious young travelers, but Proper Hospitality plans to go after guests who can afford a higher-level experience, said company President Brian De Lowe.

Proper Hospitality will largely gut the building and start over, while preserving the best historic features in a $50-million makeover, he said. Among the keepers are the fourth-floor dining room, which will become a restaurant. Excavation there revealed hardwood floors and a ceiling painted in Art Nouveau design with scrolling patterns and floral elements that will be restored.

Other rare features are the swimming pool on the seventh floor and a full-size basketball court on the sixth floor. Each will be incorporated into a large suite for rent to guests who want a special place to play.

“With 20-foot-high ceilings and parquet floors, we think we’ve finally found the spot for the Clippers to stay and to have some epic post-game celebrations,” De Lowe said

A communal swimming pool will be added to the roof, along with a lounge serving food and drinks. A neon sign in the style of the 1920s that says “Proper” will also be erected on the roof. The ground floor will have another restaurant and bar, along with a coffee stand.

Hotel sales broker John Strauss of Jones Lang LaSalle expects several more boutique hotels to show up in downtown L.A., in part because of its status as one of the nation’s fashion centers.

“The fashion and entertainment industries are mainly in New York, Miami and L.A., and they feed off each other,” Strauss said. “That customer base is always looking for some cutting-edge experience.”

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