Do luxury hotels bode well for the local housing market?

A new luxury, boutique bed and breakfast hotel has been approved for construction at the corner of San Antonio and Main Street in Los Altos.  The three-story 12,000 square foot building will have 18 rooms.  The builder, Abigail Company, has been a long-time successful builder of luxury residences in Los Altos.  This latest project is inspired by homes and estates seen in the French countryside.

So, does this mean that the economy is coming around enough that visitors will stay in town?  I can't imagine the room rates will be cheap, given what else is available locally.  Though rates haven't been published, it's safe to say they'll be in line with other luxury hotels in the area.  That said, I see this new hotel as an indicator that there are people who believe that the economy is turning around.  Building such a hotel tells me that we'll see more discretionary spending which could result in empty stores replaced with new businesses and downtown becoming a lively "destination" on the Peninsula.

Assuming the economy is turning around enough to warrant investors backing such a project, does that mean we can expect the housing market to continue improving?  Inventory in Los Altos is lower than it was a year ago.  The median is exactly the same from Q2 '09 to Q2 '10 and the average is up in 2010.  We'll have to see as the year progresses.