A 21-story, art deco-inspired hotel planned for the heart of Hollywood marks the latest chapter in R.D. Olson Development’s recent push into the high end of the hospitality market.
The Newport Beach-based company, California’s most-active hotel developer for several years running, this month filed plans with the city of Los Angeles for a 275-room hotel on Sunset Boulevard, not far from landmarks such as Amoeba Records, the Arc Light Cinema and the Hollywood Palladium.
The project, referred to in city documents as Hollywood Ivar Gardens, would be built on a half-acre site that now holds a Jack in the Box restaurant, which would be razed to make way for the hotel.
R.D. Olson bought the land in late 2014 for a reported $13.8 million—or roughly $25 million per acre—in one of the priciest land deals in the Hollywood district of Los Angeles in several years.
The developer doesn’t plan to skimp on other features of the project, either, with a rooftop pool and gym, and an open-air garden terrace on the second floor among the hotel’s notable features, according to city documents.
“We really want to do something that’s reflective of Hollywood,” said Bob Olson, president of the privately held developer.
In the case of Ivar Gardens, that means exterior architecture and interior design that “reflects the old art deco” looks of other classically designed area buildings, while embracing the high-tech “digital Hollywood” that’s now revitalizing the area, he said last week.
The project was designed by the Irvine office of Wimberly Allison Tong & Goo.
The tower could break ground by spring, assuming the developer gets city approvals in time, Olson said last week.
Construction would likely take 22 months, according to city filings.
Strategy Shift
The project is the fourth high-end hotel that R.D. Olson has undertaken in the past few years.
The first, Paséa Hotel & Spa in Huntington Beach, opened last month. The 218,000-square-foot project, built in a joint venture with Irvine-based Pacific Hospitality Group, has eight floors and 250 rooms, plus a rooftop bar.
The company’s Lido House project in Newport Beach broke ground a few weeks ago. The 130-room boutique project is going up on the 4.2-acre site of the former City Hall.
The developer recently filed plans with the city to increase the square footage of the Newport Peninsula project by a few thousand square feet to accommodate back-room operations. Plans now call for it to be 103,470 square feet.
R.D. Olson also is about three months into construction of a 271-room, full-service Irvine Spectrum Marriott. The 15-story project will include a rooftop bar and a two-story fitness center.
“We’re really pushing into full-service,” Olson said. “The select service (market) has become so saturated.”
R.D. Olson’s portfolio of projects in the past few years had gravitated toward select-service offerings, hotels largely geared toward business travelers and tourists that typically don’t feature restaurant or banquet facilities. The company has built a few thousand hotel rooms of that type since the past recession, including locations in Tustin, Irvine and San Juan Capistrano.
Most of R.D. Olson’s select-service hotels have been Marriot-branded; the company still has several of those projects under construction in California and Hawaii, and others in the pipeline. One of those, a 200-room Residence Inn by Marriott in the Maui town of Wailea, is scheduled to open in July.
The more recent shift started with Paséa, part of the Pacific City development near Huntington Beach’s pier.
“People thought we were nuts” when the company switched gears and took on the upscale project after years of recession-driven delays under prior ownership groups, Olson said.
So far the response has been good, with strong booking figures and positive feedback for the hotel, which features ocean views from all its rooms, he said. Rates at Paséa can range from nearly $300 to more than $500 a night.
Price of Success
The developer’s high-end push comes at a price. Construction costs can run 25% more or higher for a full-service hotel, compared to a select-service offering, and “your margins are less,” Olson said.
The Spectrum tower is projected to cost $120 million, or more than $440,000 per room, while the Lido House’s costs have been estimated at close to $50 million, or roughly $380,000 per room.
A cookie-cutter approach won’t work in full-service hotel development, Olson said. The goal is to provide a “sense of place” for each location, whether that is the ocean, downtown Hollywood, or the Irvine Ranch, he said.
“We’re really trying to improve what full-service means today” in terms of amenities, architecture and other hotel details, he said.
Olson, who was in Hawaii last week scouting out potential project sites, said his company is taking “a cautious approach” on additional deals.
“As the economy matures, we think there are still some opportunities out there.”
