The bustling hotel hub next to Palo Alto's downtown transit center may soon become more crowded -- and luxurious.

Clement Chen of the hotel conglomerate Pacific Hotel Management is asking the city to rezone a small site on El Camino Real to enable construction of a new five-story hotel. The new building would be an addition to the Westin and Sheraton hotels, which Chen's firm also owns.

Chen has requested that the city change the site to a Planned Community (PC) Zone, a designation that enables applicants to exceed the city's zoning regulations in exchange for negotiated "public benefits." The proposed hotel would be about twice as dense and the city's zoning regulations allow.

Members of city's Planning and Transportation Commission said on Wednesday night that they would be open to starting the rezoning process but decided that the applicant needs to provide more benefits. The commission agreed to hold off on the zone change until Chen comes back with a stronger proposal.

Although they expressed reservations about public benefits, the commissioners also found much to like in the hotel proposal. Perhaps the most enticing benefit that the new hotel would bring to the city is revenue, in the form of transient-occupancy taxes. Chen estimated that the new luxury wing would provide about $500,000 in annual taxes.

Though dubbed by the applicant as a "concierge wing" to the Westin and Sheraton hotels, the new structure would stand across the street from the existing hotel complex. The top four floors would house 44 guest rooms.

On the ground floor, the new hotel would include a cocktail lounge, a guest pantry, a business center and a dining room, which would provide guests with complimentary breakfast, afternoon snacks and evening hors d'oeuvres. The roof would feature a sun deck, two fire pits and a hot tub.

The new hotel would stand at 711 El Camino Real, former site of the Palo Alto Pet Hospital. Chen, whose father had built the two existing hotels, told the commission that the constraints of the proposed site make a zoning change necessary. These constraints include the site's location right next to the Palo Alto Medical Foundation's complex, the existing zoning designation (which could only accommodate a one-story hotel) and the small size of the property. Given these limitations, the only feasible way to run a hotel at this site is to share facilities with the Westin and the Sheraton, he said.

"A lot of support functions that normally a stand-alone has to cram into the little site, we could be handling with ease and cost efficiency at the Westin and Sheraton," Chen said.

Chen has proposed a list of public benefits to move the project along, including sidewalk improvements, new crosswalks and $50,000 in landscaping upgrades. He also proposed to install new way-finding signs to direct pedestrians from downtown Palo Alto to the Town and Country Village shopping center.

Vice Chair Lee Lippert said he was "seduced by the project," which he called "handsome" and "appropriate" in its land use. The tax revenues make the project particularly lucrative, numerous commissioners said.

But Lippert and others also argued that the bulk of the "public benefits" proposed as part of this application would mainly benefit the hotel and its clientele -- not the public at large. These benefits, the commission agreed, fall short of what the applicant would need to offer to get the zone change.

"It's rich like cream -- there's a lot of really good feelings about the project," Lippert said. "Many of the community benefits don't quite measure up to the same richness.

"I feel that can possibly be the skim milk or the low-fat milk or even the whey of the project."

Commissioners Eduardo Martinez and Daniel Garber proposed initiating the zone change at Wednesday's meeting, but ultimately agreed to delay the vote and allow the applicant to present a stronger package of benefits. Garber pointed to the site's close proximity to the downtown transit station as a good reason to support the new development.

"This is where we want to have density in the city," Garber said.

Chair Samir Tuma also said the proposed project "makes a tremendous amount of sense" when it comes to land use. But with so many reservations about the public-benefits package, he and the rest of the commission agreed to delay the vote until June 22.