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In San Diego, W Stands for on Time and Under Budget

In San Diego, W Stands for on Time and Under Budget

Tourism: New Downtown Hotel Opens Doors in a Neighborhood Setting

BY CONNIE LEWIS

Staff Writer

The posh W San Diego opened its doors with the usual ribbon cutting fanfare of cocktails and hors d’oeuvres.

But what was unusual was that the project was completed early and $1 million under budget, said Jack vanHartesvelt, vice president of Seattle-based Kennedy Associates Real Estate Counsel Inc., a general partner in structuring the deal.

The developer for the project was Gatehouse Capital Corporation of Dallas.

The price tag to build and open the 20-story structure, with 261 guestrooms, three bars and a full-service restaurant on West B Street was $62 million, vanHartesvelt said.

Of that sum, construction was $34 million, while the land and building, formerly known as the Old Columbia Square, which houses the independently owned Karl Strauss Brewery & Restaurant-Downtown, cost $8 million, he said.

Kennedy Associates was also the pension fund manager for a group of AFL-CIO labor unions that own a 90 percent share of the hotel. New York-based Starwood Hotels and Resorts Worldwide Inc., which owns the W brand, has a 10 percent equity share.

As part of the deal with the union investors, a neutrality agreement was made that will allow the Hotel Employees & Restaurant Employees Union of San Diego Local 30, AFL-CIO to organize the W’s staff, said Rob Stirling, the hotel’s director of sales and marketing.

According to Molly Rhodes, a researcher for the union, 10 full-service hotels in San Diego run as union shops.

Having used only union workers in construction of the building, vanHartesvelt credited them with helping to bring the project in two weeks early and under budget.

“We paid a fair amount of overtime, but we had ample room in the budget,” he said. “Because of the brotherhood (of union tradesmen) there were no problems (in construction) that could have caused delays.”

The motive behind an early opening was to be fully staffed and operational before January’s Super Bowl in San Diego, vanHartesvelt said.

The expanded San Diego Convention Center, which increased the need for hotel rooms, also prompted investors to build one of the world’s 17 W’s in Downtown. But being in the heart of a new residential loft district just south of Little Italy was another enticing factor, he said.

“When we started making plans, conventional wisdom told us we should be in the Gaslamp where tourists and conventioneers go, but I wanted to be in a place that would attract more of the locals as well,” he said.

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