Beverly Hilton Plans $500-Million Expansion

The owner of the Beverly Hilton on Friday unveiled plans for an elaborate $500-million expansion that would add ritzy condominium towers while seeking to make the hotel more competitive.

But the project, which needs approval from Beverly Hills officials, has already provoked some nearby residents who fear that the development could further aggravate the area's considerable rush-hour traffic woes.

Technology magnate and budding hotelier Beny Alagem will request permission to deviate from the city's three-story height limit by building two 13-story condominium towers and a 15-story "condo hotel," where rooms would be rented to guests when their owners are away.

That would follow a hotel industry trend to add luxurious condos that can be serviced by hotel staff.

"Virtually every new development and even existing project owners are looking at a residential component," hotel industry attorney Jim Butler said. Prices have not been set for the condos, though some Beverly Hills units sell for more than $3 million.

Alagem also wants to position the upgraded hotel as a less-expensive 4 1/2 -star alternative to nearby five-star rivals such as the Peninsula. The Beverly Hilton was hotelier Conrad Hilton's most luxurious property when it opened in 1955, but its reputation faded in recent years as maintenance was deferred and new competitors arrived.

The project would remake the appearance of the busy eastern entrance to Beverly Hills at the junction of Santa Monica and Wilshire boulevards.

"The Beverly Hilton is a preeminent gateway to Beverly Hills," said Alagem, who will present his proposal to a joint meeting of the City Council and Planning Commission on Tuesday. "It's time for a new image for our property."

Two new three-story buildings on Wilshire Boulevard would house 96 guest rooms and shops, but the overall count of rooms for rent would be reduced to 523 from 569 by razing the free-standing Oasis Court and Lanai guest room buildings. Trader Vic's restaurant also would be removed. All 1,400 parking spaces would be underground. Although it would have fewer rooms, the improved hotel -- to be renamed the Beverly Hilton Oasis -- would command higher rates and become more profitable, said Ted Kahan, president of Alagem's Oasis West Realty. Average rates have been raised by about $100 a night amid an $80-million makeover of the central hotel that is nearly complete.

Alagem, who founded technology company Packard Bell Electronics in 1986, bought the Beverly Hilton from entertainer Merv Griffin in 2003 for $130 million. Alagem left Packard Bell in 1998 and has invested in real estate as an owner and manager of commercial properties.

His proposal follows the December announcement of a planned $500-million condo and retail project next door on the site of a Robinsons-May department store slated to close this spring.

Some neighbors voiced concerns about the development.

"We have two projects next to each other in tandem that will destroy not only Beverly Hills but the Westside," said Louis Lipofsky of the Beverly Hills North Homeowners Assn.

Oasis West said it planned to address the traffic concerns in several ways. It would shave off part of the property to create a right-turn lane on Wilshire, expand and reconfigure driveways, create a signalized intersection and possibly realign Merv Griffin Drive with North Whittier Drive.

"We know people are concerned," said Corinne Verdery, senior vice president of Oasis West. "We think that our parking and transportation plan will mitigate the project."

If the expansion project is approved, it will be at least three years before construction begins, she said.