San Clemente-based Sunstone Hotel Investors Inc. is planning a $50 million expansion of its 403-room Hyatt Regency Newport Beach hotel.
Plans call for adding 88 timeshare rooms, an 11,000-square-foot ballroom, a 10,000-square-foot spa and a parking garage.
The project is a couple years from breaking ground and has been in the works for the past three years, according to Paul Devitt, general manager for the Hyatt Regency Newport Beach.
“It’s really preliminary still,” he said.
The expansion was approved by the Newport Beach Planning Commission and should go before the City Council in January.
From there, the Hyatt will have to seek approval from the California Coastal Commission.
“So we anticipate another year or so before plans are finalized,” Devitt said.
Sunstone, which bought the hotel in 2002, is looking to the expansion to drive revenue from guests and meetings, Devitt said.
The company is funding the expansion on its own, said Ken Cruse, chief financial officer at Sunstone.
“We have no near-term needs for external financing,” he said.
Sunstone had $232 million in cash as of Sept. 30. It also has an unused $200 million credit line.
The cash and credit “gives us a major competitive advantage in terms of debt and our ability to capitalize on any opportunities,” Cruse said.
Like others, Sunstone is feeling the effects of the economic downturn, which just now is working its way to hotels. The company owns 45 hotels across the country. Besides the Hyatt Regency, Sunstone owns one other local hotel, the Fairmont Newport Beach.
Revenue, occupancy and average daily rates were down at Sunstone’s hotels in the third quarter from a year earlier.
At the Hyatt, “business has been good, but it could always be better,” Devitt said.
The Hyatt was built in the 1960s and was one of the first hotels in Newport Beach. The hotel once was owned by John Wayne and was known as the John Wayne Newport Inn.
The hotel has been updated many times through the years, including a Sunstone-led renovation in 2004.
Some changes that don’t require government approval already are under way at the Hyatt.
During the third quarter Sunstone started on $21 million in upgrades to its hotels, including a $2.5 million renovation of 20,000 square feet of meeting space at the Hyatt.
Plans call for new lights and carpets and a fountain and landscaping to make an outside patio more appealing to social and business gatherings.
Plans awaiting final approval include adding a larger ballroom, which will push the Hyatt’s total meeting space to 31,000 square feet.
The Hyatt and other Newport Beach hotels have watched most big meetings go to Dana Point or other cities with bigger hotels.
The Hyatt’s spa addition is designed to compete with luxury coastal hotels. Plans
call for massages, mud baths, steam rooms and saunas next to the hotel’s swimming pool.
For now, demand for meeting space has slowed amid the recession and less spending on events by businesses, according to Devitt.
Meanwhile at Sunstone, President Art Buser is set to take over as chief executive next year.
Buser was hired in July after a search to replace chief executive Steven R. Goldman, who left to become president of global real estate and development for Hilton Hotels Corp.
Founder and longtime leader Bob Alter, who had stepped back to chairman, has been running the company since Goldman left. He plans to remain chairman when Buser becomes chief executive in July.
