Timing wasn’t on the side of the St. Regis Monarch Beach Resort in Dana Point, which opened to a soft economy that grew sharply worse after Sept. 11.
The $230 million upscale hotel suffered about 3,000 cancelled reservations, scrambled to re-analyze its business plan and tweaked its marketing strategy after the terrorist attacks. But the resort’s operator, Makar Properties in Newport Beach, says the St. Regis is rebounding and bucking the trend among high-end resorts.
“In the short term, because of Sept. 11, there was a little bit of an impact,” said Paul Makarechian, chief executive of the real estate development company. “But we’re tracking back on our estimates.”
The resort’s business was off by about 11% in September and by about 18% for October compared with early business projections, according to Jens von Gierke, vice president of hospitality at Makar.
Perhaps the biggest blow to the hotel was the loss of a software conference that was being held by Credit Suisse First Boston Corp. when the attacks hit in September. The investment bank had reserved 300 of the resort’s 400 rooms. But attendees abruptly left and took buses back to the East Coast halfway through the conference.
“That was pretty much a big crush for us,” von Gierke said.
But he said the resort still posted around a 50% occupancy rate for the September and October, which is good for “any new hotel.”
“We were happy with that,” he said.
Von Gierke added that November is expected to be St. Regis’ strongest month yet, with the resort projecting to hit a 60% occupancy rate.
“We’re one-third through (November) and that’s how we’re going to end up,” he added.
The St. Regis is not alone when it comes to high-end hotels scrambling to make changes in the wake of Sept. 11 and the sputtering economy. The segment has been hardest hit,and has been slowest to recover,in the lodgings industry.
Down the road at the The Ritz-Carlton, Laguna Niguel, hotel spokeswoman Lisa Poppen said things are picking up since Sept. 11.
“We’ve definitely seen business rebound,” she said.
Groups that had to cancel due to restricted travel are rebooking, Poppen said. And the hotel is seeing smaller groups that are booking two to three weeks ahead of time instead of months out, she said.
As of Oct. 31, occupancy at upscale chains was down 16.4% from the same period last year, vs. 10.6% for the industry as a whole, according to Hendersonville, Tenn.-based Smith Travel Research.
Local upper-end hotels also are feeling a pinch.
James Stockdale, consultant at PKF Consulting in Los Angeles, said high-end coastal resorts in the greater Newport Beach market were down more 30% for September. October estimates were not available.
“There’s definitely a market for those hotels, but it’s going to be challenging for a little bit as the economy gathers up steam again,” Stockdale said.
He added that high-end resorts from Santa Barbara to San Diego now are focusing their advertising efforts on the drive market to “pick up room nights where the airline travel has fallen off.”
The St. Regis fits that profile.
The resort has retooled its marketing campaign to lure anyone that “can get here in a half a day,” Makarechian said.
“It’s been more of a refocusing of those marketing dollars,” he added.
Despite challenges, von Gierke said the resort did not close any of its restaurants or operations, or cut rates,though it is being “more flexible” with “big volume” accounts.
In the meantime, Monarch Beach Golf Links, the golf course adjacent to the resort, is watching bookings, which normally range from 120 to 150 a day,build steam after falling to about 100 a day in September, von Gierke said.
The course, a Makar property that recently underwent $1.5 million in improvements, should get big exposure in December, when the course plays host to the Hyundai Team Matches, a Professional Golf Association-sanctioned tournament featuring Jack Nicklaus, Tom Watson and Arnold Palmer. The event airs live on ABC Sports starting on Dec. 7.
