Hyatt: Say goodbye to hotel Hyatt: Say goodbye to hotel (April 23, 2004)

Decision is a financial blow to Palo Alto

by Don Kazak

Hyatt Hotels dropped a bombshell Thursday morning by deciding against rebuilding the aging Rickey's Hotel. Full replacement of the hotel would have netted the city an estimated $1 million to $1.4 million a year in hotel taxes.

Instead, Hyatt will build about 200 town houses and single-family homes on its El Camino Real property at Charleston Road.

Nearby residents will benefit from fewer traffic impacts, but the loss of the hotel greatly dismays city officials.

"It's a major disappointment," City Manager Frank Benest said. "We have major concerns about maintaining our economic base. This hurts our ability to support the business community."

Hyatt representative Mark Solit said Thursday that the economy has changed in the seven years since the company planned to replace the hotel. Such factors as Sept. 11 and the dot-com bust has nearly wiped out the lucrative market for business conferences, an important piece of the Hyatt Rickey's financial health.

Solit added the decision "is a difficult but necessary one."

But the city isn't entirely giving up on the site.

"We're not pleased," Benest said. "In my mind this is not the end of the discussion."

Benest declined to elaborate if there would be additional discussions with Hyatt, but said, "the Palo Alto process will look at alternatives" for the property. "We can't have a laissez faire attitude about that strategic property."

That sentiment was echoed by Mayor Bern Beecham. "I want to see if there are any options available to the city that would affect their decision," he said.

Planning Director Steve Emslie, who met with Solit Thursday morning and heard the bad news, thought there might be more room for discussion. "They seemed open to listening to us," Emslie said.

Hyatt's original plan to replace the 344-room Rickey's with a 320-room conference hotel and 300 units of housing ran into overwhelming opposition when it was first proposed in the late 1990s, with 10 neighborhood associations opposing the plan last year.

Senior Staff Writer Don Kazak can be e-mailed at dkazak@paweekly.com

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