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Claremont Hotel For Sale, Shattuck Hotel in Escrow

Friday February 06, 2004

A deal has been all but completed to sell the 94-year-old Shattuck Hotel and turn it into short-term student housing for international students, said city officials and hotel employees. 

The sale price has not been disclosed, but hotel manager Abhiman Kumar said the deal was in escrow, awaiting final approval from lenders to San Diego-based businessman Aki Ito. 

Ito, the owner of Vantaggio Suites, operates four short-term housing complexes—two in San Diego and two in San Francisco—that cater to international students with short stays in the U.S.  

Barbara Hillman of the Berkeley Convention and Visitors Bureau met with Ito last week and reported that he intends to turn Berkeley’s lone downtown hotel into a similar operation, though he’d consider keeping a small portion of the 175 rooms available to hotel guests. 

Ito did not return phone calls for this story. 

The change in operations could cost the city thousands in transient occupancy tax revenues it collects from the hotel. Any stay longer than 13 days doesn’t qualify for the 12 percent tax, one of the biggest moneymakers for the city, said Ted Burton of the Office of Economic Development. City officials refused to divulge tax revenues collected from the hotel, but said last year the city garnered $2.5 million from its 23 hotels. 

If finalized, the sale will jeopardize the jobs of the 25 hotel employees, Kumar said, since less upkeep will be needed for short-term housing. He said the hotel, which already houses about 60 students on a short-term basis, would remain open during the transition. 

Kumar was among several who questioned Ito’s premise that student housing could support the hotel. 

“He needs to look at the big picture,” Hillman said. “One hundred seventy-five rooms is a lot to fill with students. I don’t think he’ll find enough business to succeed that way.” 

Becky White, assistant director at Cal Rentals, said that with UC Berkeley shutting down its English Language Program this spring the demand for short term housing was likely to drop. “At the moment there is enough housing,” she said, adding that there was a market for international students arriving for short-term research assignments, but that she usually received one such case per week. 

The pending sale is the latest chapter in the saga of the star-crossed hotel.  

Jerry Sulliger, who operated the Shattuck from 1993 to 1999, said business was strong under his stewardship, but a limited lease kept him from undertaking major renovations.  

In 1999, Global Royalty Hotels, a Southern California-based chain, bought the building and business for $8.5 million, but its plans to renovate the hotel stalled immediately when the man they had pegged to develop it died in a car accident, Sulliger said. Two years later, they sold to Sanjiv Kakkar for $12.5 million. 

Kukkar has made upgrades, Hillman said, but not enough to make it viable in an increasingly competitive market joined by new hotels in Emeryville. “If a good owner invests money into it, it would do really well. But I don’t think he’s the guy. He’s going to do cosmetic work, but it’s not going to be a top of the line hotel. 

Ito received high marks from Darlene Esparza of the Office of International Services at UC San Diego, who said international students who stayed at his complex had never lodged a complaint. 

Burton said business at the Shattuck has declined recently while the Hotel Durant has held firm in a tough market. When the Shattuck was last up for sale in 2001, Burton said an independent hotel operator told him it would require a cash infusion of $15 million to bring it up to snuff. 

The Shattuck’s future as a hotel was already on shaky ground after UC Berkeley announced its intention last fall to build a 200-room hotel and convention center at Shattuck Avenue and Center Street, just one block away. 

Though Burton thought both hotels could thrive downtown, Sulliger said the new UC development would likely mean the end for the Shattuck. “The Shattuck is an older hotel that’s been remodeled,” he said. “People would go to a modern hotel if it’s next door..