Three new hotels planned for Millbrae 

The recovering hotel industry in San Mateo County has brought plans for three new hotels — and several hundred thousand more dollars in annual revenue — to the city’s east side.

The Planning Commission this week gave the final approval needed to turn the aging Clarion Hotel site, at 401 E. Millbrae Ave., into three new hotels that many hope will compete better in the recovering hotel market.

Starwood Hotels, Clarion’s parent company, plans on building a 167-room hotel called Aloft; a 124-room hotel named Element; and a third hotel that is currently undersigned and unnamed, but must fit in the approved space allotted and contain 120 rooms, city planner David Petrovich said.

"It would have taken another six months to wait for the design on that [hotel]," Petrovich said. "We wanted to move quickly on this."

Starwood Hotels purchased the 7.9-acre Clarion site, which operated under a franchise agreement, from Choice Hotels with the intention of demolishing the decades-old Clarion, Petrovich said. Officials hope the hotel project will be completed by fall 2008.

Since the parcel is already developed with a hotel — and already had the proposed number of rooms in the past — Petrovich said an official environmental impact report was not required for the project.

A combination of the dwindling condition of some 150 cabana rooms and fewer travelers prompted the Clarion to raze these units and use the space as a long-term parking lot for travelers flying out of San Francisco International Airport . Though the city would lose out on some $50,000 annually from the tax on private parking lot income, it would recoup that and more should the hotel bring back another 150 rooms, Assistant City Manager Jeff Killian said.

Ten percent of each hotel bill goes to the city in hotel taxes. The city expects more than $3.6 million in hotel taxes to come in from more than 10 hotels by the end of this fiscal year, up seven percent from $3.4 million in fiscal 2005-06.

Millbrae cannot disclose how much the Clarion generates in hotel taxes because Clarion is a private company. But the Clarion, Westin — also owned by Starwood — and Best Western El Rancho Inn on El Camino Real are the top producers for hotel taxes in the city, according to Killian.

The extra hotel tax will become a welcome source of General Fund revenue, which will become particularly important once the city’s $1.2 million fire assessment tax sunsets at the end of the 2008-09 fiscal year, City Manager Ralph Jaeck said.

"We’ll have to come up with an extra one million [dollars] a year and that revenue could definitely help us with that," Jaeck said.

E-mail Tara Ramroop at tramroop@examiner.com.

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