The Shattuck Hotel is no longer for sale, its owner said Monday, after the prospective buyer, Aki Ito, pulled out of the deal that would have turned the 94-year-old Berkeley landmark into short-term student housing.
Ito, a San Diego-based businessman, declined to disclose why negotiations collapsed just one month after officials for the Shattuck Hotel said that the deal was in escrow awaiting final approval from Ito’s financiers.
The hotel at the corner of Shattuck Avenue and Allston Way will now remain the property of Sanjiv Kakkar, who purchased it in 2001 for $12.5 million. Neither Kakkar nor Ito would disclose the proposed sale price or other terms of the deal that for weeks had been rumored to be in jeopardy.
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. Had the sale gone through, he indicated that he planned to turn the 175-room hotel into a similar operation.
Turning the Shattuck Hotel into a single-room-occupancy facility could have cost the city thousands in transient occupancy tax revenues it collects from the hotel. Any stay longer than 13 days does not qualify for the 12 percent tax, one of the biggest moneymakers for the city, said Ted Burton of the Office of Economic Development (OED). Last year the city garnered $2.5 million from its 23 hotels. Privacy laws, however, prohibit city officials from divulging tax revenues collected from any individual hotel.
Kakkar blamed a Feb. 6 article in the Daily Planet for complicating the negotiations. “You jumped too soon with the article basically. It caused confusion,” he said.
The offer from Ito came unsolicited, Kakkar added. Though Burton said other groups have inquired about the Shattuck, Kakkar insisted he has received no other offers and planned to keep the hotel.
Barbara Hillman, president of the Berkeley Convention and Visitors Bureau, guessed that the pending closure of the English Language Program at UC Berkeley Extension helped sink the deal. “That’s 3,000 students that are not going to be here during the summer,” she said. “It’s hard to fill 175 rooms 365 days a year, especially when there are fewer international students traveling.”
Ito faced other hurdles as well. He would have had to assume responsibility for an expensive ongoing installation of a sprinkler system. And by changing the hotel’s use to a residential dwelling, Burton said, he would have triggered a host of code requirements for the aging building.
“I can well imagine that when Mr. Ito saw the number of city requirements he had to meet, he might have had second thoughts,” OED’s Burton said.
The Shattuck Hotel has already undergone renovations, Abhiman Kumar, the hotel’s manager said in an earlier interview. Many of the rooms, the lobby and much of the fifth floor have been refurbished, he said. Kumar added that the hotel was making a healthy profit, even though about 60 of the rooms were already being rented on a short-term basis to UC Berkeley and other students.
Burton, however, said he didn’t think the renovations were sufficient to significantly boost business. In 2001, the last time the hotel was up for sale, he said an independent hotel operator told him the Shattuck needed a cash infusion of about $15 million to compete with top-of-the-line hotels.
With a new UC Berkeley-backed hotel and conference center planned for just a block away at the current Bank of America branch at Shattuck and Center Street, the Berkeley Convention and Visitors Bureau’s Hillman sees better days ahead for the Shattuck. She said the planned complex would return visitors and conferences that had been displaced to Emeryville. “When the new hotel opens we can attract conferences and events we couldn’t have gone after before, and the guests can’t all stay at that one new hotel,” she said. “The Shattuck will get business it hasn’t gotten before.”›