Beverly Hills Hotel Boycott: The Economic Fallout

5:00 AM PST 05/07/2014 by Tina Daunt, Gregg Kilday
Jacqueline Mansky
Jay Leno compared the sultan to Donald Sterling during a May 5 protest at the hotel.

An exodus due to anti-gay owner the Sultan of Brunei reveals "shockingly few" alternatives as events scramble for space and the hotel stands to lose millions of dollars.

A version of this story first appeared in the May 16 issue of The Hollywood Reporter magazine.

The growing boycott of The Beverly Hills Hotel has left event planners scrambling for new locations, forced Hollywood's boldface names to test other lunch spots and even led to speculation that Hassanal Bolkiah, the Sultan of Brunei, might be forced to sell the fabled property he has owned since 1987. "I know and love the people who work there," says Barbara Davis, whose late husband, Marvin Davis, sold the hotel to the sultan for $185 million and who hosts several charity events there. "But I can't have a luncheon that's about caring for people at a place where the owner wants to stone gays."

The furor directed at the Dorchester Collection properties -- which include The Beverly Hills Hotel and Hotel Bel-Air -- stems from the sultan on May 1 instituting Sharia law, which calls for death-by-stone of gays and adulterers. Such high-profile events as the Motion Picture & Television Fund's Night Before the Oscars party and THR's Women in Entertainment breakfast have canceled bookings at The Beverly Hills Hotel. The C.H.I.P.S., a support group of the Children's Institute Inc. charity, moved its May 8 luncheon to the Four Seasons; Davis shifted the May 19 kickoff for her Carousel of Hope Benefit to The Peninsula; the group GLSEN canceled its Respect Awards; the Beverly Hills Bar has canceled all its upcoming programs and events at the hotel; and J.J. Abrams and wife Katie McGrath are looking for another venue for their Children's Defense Fund gala. Says one planner: "Unless things change, no one is going to be doing events there. Even if you did try to hold an event there, it would be hard to sell tickets."

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Christopher Cowdray, CEO of Dorchester Collection, admits the cancellations as of press time would amount to about $1.5 million in lost business. That number could balloon to $6 million a year if just 10 percent of bookings cancel, speculates hospitality analyst and professor Dr. Gary Vallen, basing his calculation on a $500 a night room rate and projecting a 10 percent drop in revenue from both rooms and dining/hospitality.

Some of the groups that canceled at the last minute also have had to eat costs: Teen Line, which moved to the Sony lot for a benefit honoring the studio's Amy Pascal, reports losing $60,000 (The C.H.I.P.S. reported the hotel refunded its deposit). Meanwhile, event planners are racing to book alternate venues. But it's not as easy as it sounds because only a handful of hotels such as The Beverly Hilton and the Beverly Wilshire offer ballrooms on par with The Beverly Hills Hotel's Crystal Ballroom, which seats 560 -- and often they are booked far ahead of time. "There are shockingly few event spaces in Los Angeles," says another planner, who predicts that some events will need to erect tents for their own spaces.

And it's not just the hotel's events business that could be hurt. Polo Lounge regular Irena Medavoy, wife of producer Mike Medavoy, used Facebook to urge her friends to boycott, and Jeffrey Katzenberg recently was seen having breakfast at Culina at the Four Seasons. Music mogul Clive Davis, a hotel regular, checked in to the Peninsula. Ladies who lunch at the Polo Lounge have moved to Soho House (where Cheryl Saban had her birthday party), Culina and e.baldi (where Cynthia Sikes Yorkin and Lauren Shuler Donner recently were spotted). Older society doyennes are even trying to get Soho memberships, though many never have been there. "I'll go to Craft or another restaurant," says Sherry Lansing, known for holding meetings in Polo Lounge booths.

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Cowdray claims "there has been no noticeable impact" on the hotel's day-to-day business. And he argues that Dorchester Collection is run autonomously from London and has nondiscriminatory policies, including benefits for same-sex partners. "There is a far wider picture,” he says. “This is also going to impact the city of Beverly Hills. The city depends on a global economy. We’re not the only hotel in this city that is owned by international organizations that have connections to Islamic countries. What’s important is that the global economy has not been understood. There is multinational ownership of many iconic American companies, products and services, and most consumers don’t have any idea who owns the companies they patronize. The Beverly Hills Hotel is owned by the Dorchester Group, which is a British company. That company is a subsidiary of the Brunei Investment Agency, which is a sovereign wealth fund, and the charter of a sovereign wealth fund is to invest wisely for the protection of future generations. Last year, sovereign wealth funds contributed to the world economy to the tune of $5 trillion dollars. And some of those wealth funds were critical for the economic stimulus of the U.S. economy during the last recession."

He also says the boycott is "hurting our employees, many of whom have been here for many years." Acknowledges Lansing's husband, director William Friedkin: "It's a real conundrum because the people who work there, they don't stone anyone or imprison anybody. But you can't go there."

The furor also has ignited rumors that the Dorchester Collection could be forced to sell the hotel. "That's not up for debate," insists Cowdray. However, media mogul Haim Saban tells THR that he would be willing to buy both the Beverly Hills and Bel-Air hotels if he could purchase the properties at a fair price. "We are boycotting," he says, "And yes, we would be interested to buy both the Beverly Hills Hotel and well as the Bel-Air, but we won't pay a stupid price, and if someone else buys it, we'll still enjoy the Polo Lounge and the Wolfgang Puck at the Bel-Air." Adds Davis of the sultan: "I hope he sells the hotel. Today I was asking some very wealthy people to buy Carousel Ball tables, and I asked them if they'd mind buying the hotel, too."

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