When workers put the finishing touches on Palo Alto's newest hotel at the end of this month, they will install erasable whiteboards, Nintendo Wii systems and a self-service bar operating on an honor system. These are among the features that 30-year-old owner Parimal "Perry" Patel expects will draw hip, young professionals like himself to Hotel Keen, a 42-room boutique hotel that will open downtown.
Patel is not an unlikely candidate to bring an edge to Palo Alto's hospitality industry. Growing up in Redwood City, he loved his father's hotel business so much that he helped with laundry and sat behind check-in counters. After studying hotel administration and working for three major hotel brands, he is now the youngest partner at BPR Properties, the Palo Alto-based firm that his father founded more than 35 years ago and which now owns the Crowne Plaza Cabana and 10 other hotels in the region.
Patel speaks quickly, smiles often and -- like many of his peers -- does not wear a tie. Shortly after joining the company in 2005, he realized that Palo Alto did not have a hotel that catered to travelers his age. BPR did a market analysis and saw an opportunity.
"You have a lot of young people and entrepreneurs coming to Palo Alto ... and there's not really a hotel that can complement that lifestyle unless you want luxury hotels. There's no fun place," he said.
Patel drew on his own preferences to create a hotel for savvy, young guests who want service that is -- like the hotel's name -- "practical, efficient and concise." Hotel Keen replaces a check-in counter with a personal concierge who will usher patrons directly to their rooms. ("The process of checking in is a barrier," Patel finds.) Bagged meals will be available for guests on the go. Long-term business travelers who go home on weekends will find their own toiletries set up in their rooms when they return Monday morning.
The hotel's design also gets to the point. Backlit mirrors, under-bed storage spaces and built-in desks make the most of the 200-square-foot rooms -- at any rate, the type of guests Keen hopes to attract "mostly feel comfortable working off their beds," Patel said. Conceived by the firm of minimalist-minded Orlando Diaz-Azcuy, the hotel's furnishings stick to contemporary pieces and a white, black and purple palette.
Keen is not all work and no play, however. When guests are not on their Wiis, Patel hopes they will come down for a glass of wine.
"We redefine what a traditional lobby should be," he explained. "Our lobby area is a place to congregate and hang out."
Hotel Keen replaces the low-income, residential Palo Alto Hotel, which BPR Properties bought for $4.5 million in 2008. It has taken one-and-a-half years and more than $1.4 million, according to city documents, to transform the run-down, dorm-like facility (some floors had shared bathrooms) into a trendy "concept" hotel.
Patel anticipates that Hotel Keen will have no problem attracting business.
"June will be a good month," he predicted. "I don't foresee that the ramp-up time will be very long."
He is not the only one giving a vote of confidence to Palo Alto's lagging hotel industry lately. Hotel development is on the rise for the first time in 10 years with three new hotels in the pipeline. The City Council approved a 143-room hotel near the Baylands and a 167-room Hilton property at the site of Palo Alto Bowl in the last six months, although construction on the second project may not begin for several years. The Westin Hotel recently submitted preliminary plans for a 44-room adjunct to its El Camino location. (Stanford University had proposed a hotel as part of plans to expand the Stanford Shopping Center in 2007 but withdrew the proposal last year.)
Palo Alto's development boom is atypical. Nationally, planning or construction of new hotels dropped by almost 40 percent in the last year, according to the American Hotel & Lodging Association. President Joe McInerney does not expect it to pick up until at least 2012.
Lynn Mohrfeld, president of the California Hotel & Lodging Association, explained: "It's really a combination of a soft economy in which hotel rates are suppressed, which in turn makes the feasibility of the development more challenging, and a lack of any available financing."
The anomalous building wave in Palo Alto may reflect rising demand for hotel rooms. While occupancy rates for the city's 1,830 rooms fell by 10 percent last year, Palo Alto lost fewer visitors than the regional average, and occupancy levels have been edging upward since February 2009, according to a report from the planning department. Developers are "realizing that there is some more demand, particularly with Stanford Hospital expanding and ... increased tourism interest in Silicon Valley and Palo Alto and Stanford specifically," city planning director Curtis Williams said.
Business has been looking up this year at the Crowne Plaza, as group and corporate travelers have slowly returned, Patel said.
"The market has seen its worst," he said. "I think we're out of the lull."
Boutique hotels are part of the gradual rejuvenation of the industry.
"There has definitely been an expansion of the boutique hotel category" in California, Mohrfeld said. Nationally, the average size of new hotels is only 103 rooms, according to the American Hotel & Lodging Association.
The trend towards smaller "lifestyle" hotels aimed at younger guests has to do with supply and demand.
"Most places have big-box hotels. ... It isn't that they're going out of style, it's just enough of them that are out there," McInerney said.
At the same time, the customer base is changing. "There are a lot more young people out there traveling today, and they want to have something that's a little more suited to their liking than their father's Chevrolet," he said. "Pool tables in the lobby, game areas ... places where people can sit and talk and have refreshments, and computer banks."
As travel picks up, visitors will also be more cautious of rates and forgo luxury options for places like Hotel Keen, where nightly rates will range from $145 to $175, Patel predicts.
Developers who want a piece of the pie in Palo Alto are finding that financing is still a challenge, however. Reliance on their own funds to finance development costs, a conservative investment strategy, and a hands-on, "A-to-Z" approach helped BPR Properties break through Palo Alto's high barriers to entry, Patel said.
McInerney predicts it will take two to three years before finance for new construction becomes available nationally.
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