LOS ANGELES — The University of California, Los Angeles, plans to build a $152 million on-campus hotel and conference center to be funded by a $40 million donation and $112 million of bonds.
A shortage of modern meeting space and overnight rooms on campus places UCLA at a disadvantage when competing with other top-tier universities for conferences, said spokesman Steven Ritea.
The project’s design, budget and environmental impact reports have to be approved by the University of California Board of Regents before work can begin. A public hearing will be held Nov. 14 at 7 p.m. at the campus’ faculty center to help determine the scope of the EIR. Officials will submit a business plan to the Board of Regents in March 2012 for approval.
The university originally proposed a plan earlier this year to raze the faculty club house, but after the original proposal met with resistance from faculty members, it came up with a new proposal to demolish a parking garage.
“After a detailed study, we decided on a new location that does not compromise our vision for a conference and guest center,” chancellor Gene Block said in a statement.
Officials said they hope to begin construction in the summer of 2013 and finish in the winter of 2016 on the seven-story building, which will have 250,000 square feet of meeting space and 250 hotel rooms.
In January, Meyer Luskin, an alumnus, and his wife, Renee, donated $100 million to UCLA. The Luskins stipulated $40 million of the donation go for construction and $10 million be used to fund programs.
The remaining $112 million in construction costs will be financed by bonds, expected to be repaid with revenue from meetings and hotel guests, Ritea said.
The building proposal comes just four months after the Board of Regents raised tuition for the second time in a 12-month period. The board approved a 9.6% tuition increase for 2011-12 in mid-July on top of an 8% tuition hike in November 2010.
The increase raised tuition throughout the university system by $1,068 to $12,192 for this academic year. The system attributed the tuition hike to California budget cuts totaling $650 million, a 24% reduction. UCLA officials emphasized, however, that the hotel-conference center project would not use revenue from tuition or state funds.
Most UC buildings housing education programs are paid for from either voter-approved general obligation bonds or from lease revenue bonds. Funding for hospitals, housing, parking and athletics typically comes from revenue generated by the operations themselves.
All UCLA debt is issued by the Board of Regents. The system’s current ratings for general revenue bonds are Aa1 from Moody’s Investors Service, AA from Standard & Poor’s, and AA-plus from Fitch Ratings. For limited project revenue bonds, the system’s ratings are Aa2 from Moody’s and AA-minus from Standard & Poor’s.
UCLA is assuming a $185 daily room rate for the hotel, but will not have estimates on the project’s operating revenue until it submits its business plan in March, according to Ritea. The current average room rate for West Los Angeles hotels is over $200 and the occupancy rate is 75%, he said.
Robert Feist, a vice president with Irvine, Calif.-based Atlas Hospitality Group, said he isn’t aware of there being that many on-campus hotel-conference centers for UCLA to compete with in the country.
“I think they have enough of a base of business to do well, but I don’t know if they will approach the level that surrounding hotels have achieved — at least not immediately,” Feist said.
The submarket has experienced a 12.5% increase in revenue per available room through September compared to the same period a year ago, he said.