LA Live/Ritz-Carlton Convention Hotel to Open on Schedule

Tim Leiweke: The uniqueness of LA Live is that we had an opportunity to create a vision, design this, and then do entitlements for the entire district. When we were working on the Staples Center, we designed LA Live. Whether it's trying to find what we like to call "anchor tenants" to create the footfall and the business for the district, we're making sure that each of the facilities is compatible with one another. And all the facilities tie into the convention center.

What makes this project unique-and certainly what is going to help us through difficult economic times-is that we have footfall at the Convention Center, footfall at the Staples Center, footfall at the Nokia Theatre, and footfall from the rest of the entertainment district. That actually creates about 20 million people into the district, before we have the individual, stand-alone customers coming into the district. Also, we have the uniqueness of 50,000 kids down the road at USC that don't have the infrastructure or the amenities that we have at LA Live and 350,000 people working in Downtown Los Angeles that also don't have the amenities that we offer at LA Live. When you add all of that together with our footfall, obviously this is a project that has a different view, not only in terms of vision and how this is going to operate long term, but in particular with the economics.

The last piece I'll add is that we tried to find the best brands that we could. It was very important for us to make sure we were doing business with the best people in each of the categories. In the case of the hotel: to have the JW Marriott and the Ritz brand; to have the Ritz and the JW Marriott management team; to have the amenities that the Ritz offers to our condo holders; and to have the same reservation system that Marriott has, is a huge plus for us.

When you combine this with the other hotels in Downtown L.A.-with all due respect to the other hotels in Downtown L.A.-there is nothing else like that mix down here. That is going to appeal and do very well, not just with the anchor tenants and the business from the convention center-from the awards shows, the premieres, the sports teams, and the other activity within the district. In particular, if you're doing business or attending events Downtown, if you're going to USC, if your parents are in town for the weekend, or your football team is coming to play at the Coliseum, this is a brand, a level of services, and a shared number of rooms that, from a competitive standpoint, gives us a huge edge within this marketplace.

We went out, found the best brands that we could-Wolfgang Puck for the catering, the Ritz and Marriott for our hotel, and restaurants like Katsu-Ya-for our entertainment district. We were very driven to make sure that we offer a quality and a group of partners and services back to our customers that was unique to any district anywhere is Southern California.

Bill Marriott: The old adage, "If you build it, they will come," is certainly true here. This is really a unique opportunity for any hotel company and, particularly, for us. People want to stay in a hotel where there is a lot going on in the neighborhood. If all of this hadn't taken place under Phil Anschutz and Tim Leiweke's direction and investment, we certainly wouldn't be here. This is a marvelous, unbelievable development. When you think of all the venues that Tim has just mentioned...everything coming in here sparks activity and excitement. It's a place where people want to live, entertain, shop, and have fun. Our residences-which are in the top part of the tower and are an architectural masterpiece-will be Ritz-Carlton residences and will offer the same services that you would get at the hotel. If you want to have a party you can call the Ritz-Carlton chef to host the party. Or you can order room service from Ritz. If you want Ritz housekeeping, you can get that-Ritz-Carlton concierge, the same. The Ritz-Carlton brand is a very important part of the residential component, and the residences are a huge part of the overall development.

There is something near 220 residences and a large majority of them have sold so far. The hotel is on target to book somewhere between 125,000 to 150,000 rooms by the end of this year of convention business. As a result of the hotel coming in, the Convention Center now has an anchor hotel. The Convention Center has increased their bookings tremendously. Two years ago they had 20 groups on their books, and now we've booked 53 groups last year, and we'll book even more next year.

This development is really creating energy and excitement, for not only the convention center, but also the entire program. The Marriott Hotel has 77,000 square feet of meeting space. There is a 25,000-square-foot ballroom, a 20,000-square-foot junior ballroom, and over 800 rooms in the hotel. There are about 120 rooms in the Ritz-Carlton. JW Marriott is our top brand next to the Ritz-Carlton. We're holding at over $225 in average room rate at the Marriott. Business and bookings has been very strong and we're really excited to be a part of this wonderful vision.

David Abel, The Planning Report: Do you have a view of how well the Convention Center and LA Live/Ritz-Carlton will leverage each other?

Bill Marriott: The Convention Center hotel is extremely important for meeting planners to have a headquarters hotel, and they will finally have one here at the L.A. Convention Center. That's why we're seeing so much booking of activity at the Convention Center. They see that it is going to be a spectacular hotel. It's going to have everything around it that people need.

When you have a convention you don't just come to go to the meetings. You come to have a good time, you come to go to the beach, people want to shop, and get a taste of Hollywood here in L.A. Whether it's the Nokia Theater, or some of the venues that are going up, it's going to be a really exciting convention destination. This will lift the room rates and the occupancies of all of the hotels in this city because of the number of groups that are coming in and the size of the groups that are coming in...You really have a venue here that is attracting very strong business groups. I think the Convention Center is really going to come alive.

Tim Leiweke: I'll add one point to that. This used to be our favorite tagline in our speeches, and probably still is: We were behind Omaha in conventions. That's, I guess, a real compliment to Omaha, but also a statement about L.A. I always found it amazing that, not just Omaha, but if you went down the list, we were 26th or 27th in the country in the convention business. And now we've already booked 53 conventions this year. Of course that is not all because of the JW Marriot-Ritz, but, suddenly, L.A. has a story to tell. We have some excitement, and something to pitch to people.

We have a 750,000-square-foot Convention Center that the taxpayers have spent hundreds of millions of dollars on and that we couldn't book many things because there were no hotels next to it. Carol Schatz likes to say that Downtown there was "Before Staples Center and After Staples Center." I keep telling her that I completely disagree. The thing that will turn our economy in Downtown Los Angeles around will be the JW Marriot-Ritz-Carlton hotel. That is going to be a juggernaut...

Press Question: Can you talk about whether there have been any cancellations of purchases on the condos?

Tim Leiweke: I always find amusement with people that say they are not being impacted by this economy, because then they're living in an igloo. Everyone is impacted. We've had, at our high, probably close to 160 condos sold. We have a rather aggressive policy to make sure that our sales are real and that they are not speculators. Some of the cancellations have come from us, in situations where we thought people were speculating. We're really not interested in that. Some have come from others that maybe made a decision that they either didn't need a second home, or that now is not the time to be buying a second home. But cancellations have been minimal. We're currently just short of 140 sold.

In the world that we live in today, two things make this project fairly unique as it relates to the economy. First, we have a chart in my office on the number of press conferences scheduled by developments in Los Angeles that never happened. We're the only tower on the ground-God bless the commitment of the people involved in the money that was risked.

Secondly, the economy, in a strange way, will actually help us now, because when this turns-and the economy always turns-we predict there will be many projects that are on the back burner today put back on the plate for 2010. We will then have a two- to three-year lead ahead of them and will be the only high-end project standing. Keep in mind, we're the only project that has the Ritz brand in all of Los Angeles. We clearly think that our time to sell the remainder of the condos is going to be strong, especially toward the third and fourth quarter in 2009.

That said, everyone tells us how lucky we are that we've sold the majority of our condos and that we've only lost 20. We certainly do not underestimate the impact of the economy. It sits with us on a daily basis, not just on the condos, but also on the hotel and the rest of our entertainment district.