Developer Avi Brosh Plans More Palihouses

The 36-room Palihouse Holloway was one of three new hotels to open in Los Angeles County during the first six months of this year, according to a recent report by Irvine-based Atlas Hospitality Group, which noted that hotel development in California is holding its own despite the economic downturn and Los Angeles is one of the country's strongest hotel markets. Brosh says that both the Palihouse Holloway and the 250-room Custom Hotel are performing well, which he attributes both to the the types of properties he chose to develop and the sites he chose for them. He explains that the Palihouse, for example, is not a hotel per se but is more like "a boutique hotel meets corporate housing."

The Palihouse has minimum stay requirements, like corporate housing, but its boutique design and its services set it apart from typical corporate housing. "All Palihouses have food and beverage, so they look like a boutique hotel in terms of common spaces and design," Brosh explains. Brosh created the Custom Hotel an international boutique hotel in an adaptive reuse conversion of the former Furama Hotel. He says that, corporate-wide, about half of his firm's hotels are new construction and half are adaptive reuse.

In addition to the design and operation of the properties themselves, Brosh says that the Palihouse and Custom are performing well because the specific sites that they occupy are "some of the best sites in Los Angeles." He describes Palisades as "neighborhood-centric" and focused on the top 10 US markets in its approach to choosing sites.

"The site is really critical in providing boutique-style offerings like these, which depend on identifying a very specific offering for a very specific clientele," he says. In addition to the existing properties and the development sites in Hollywood and Venice, Palisades also owns development sites in Palm Springs and San Francisco.

"We're not focused on flagging many, many hotels all over the world, we are focused on the neighborhoods that we are in. That's how we were able to acquire such good sites, get them entitled and pinpoint a very specific customer base," Brosh adds.

Hospitality accounts for about half of the business at Palisades, which also builds residential projects like its Lofts @ Hollywood and Vine and other offerings. When Palisades decided to expand into the hospitality arena several years ago, its background in developing the residential projects provided "access to a lot of different sites and opportunities," Brosh notes.

Palisades typically develops via a fairly conventional financing structure, and Brosh says that the company's business plan is to hold its properties for the long term. "We design and manage every aspect of the properties, from restaurants to bars to rooms, etc., so there is no disconnect between the owner and the operator," he says.

The schedule for his firm's future projects, like those of so many other developers these days, depend on what happens in the economy and capital markets. "Like everybody else, we are waiting for the capital markets to sort themselves out," he says.

Considering the economic downturn and the capital markets situation, Brosh says, In light of all that is happening in the economy and the capital markets, he adds, "We are really really marveling at how well we are doing, so my general tone is upbeat about hospitality in Los Angeles."