The coming independence of St. Regis Monarch Beach Resort in Dana Point after its two-year, $40 million renovation is a bid to reposition the 169-acre property in the pantheon of OC’s luxe layouts.
“This can be a top-10 resort in the country,” said St. Regis General Manager Ian Pullan.
The property is a AAA “5-Diamond” and Forbes “5-Star” facility, but the soon-to-be-crowned Monarch Beach Resort believes it can do better.
St. Regis has been through plenty in its 15-year history but has “never gone through a renovation as extensive as this,” Pullan said.
The property faced foreclosure in 2009, was bought by Washington Real Estate Holdings LLC in 2010 in a $235 million deal, and sold to Denver-based KSL Capital Partners LLC in May 2014 for $317 million.
KSL has 25 years in resort operations and “a track record of investing in their properties,” according to Pullan.
Its work at the Dana Point property has included:
• A refresh of the resort’s 400 rooms that debuted last summer.
• The new Miraval Life in Balance Spa, which opened April 2.
• Six new or redone dining offerings, a lineup that began its rollout in January and will be finished by June.
The resort also changed its lobby and arrival areas—removing obstructions to ocean views, for instance—and spruced up the Monarch Beach Golf Links.
“This is transformational,” Pullan said. “By the time we’re finished, every area of the hotel will be hit.”
Redone rooms, restaurants, and a new spa—plus increased promotions as the indie resort fully reopens—“are what’s going to drive increased business,” according to the resort.
Work on the rooms took just five months from start to finish in mid-2015.
“These are savvy owner-operators who can execute a plan,” Pullan said.
The spa is the first of its kind outside of its base at Miraval Resort & Spa in Tucson, Ariz.—also owned by a KSL-led partnership.
It’s one of 90 “destination” resort spas nationally—out of nearly 21,000 spas total—according to the International Spa Association in Lexington, Ky.
Most resort restaurants and Part & Parcel Market, a grab-and-go shop, got new looks. The Stonehill Tavern and Monarch Bay Club were untouched and open during the renovation.
Enhancements included $100,000 for the kitchen alone at the former Motif restaurant, which is now Aveo Table & Bar, Pullan said.
“Tastes have changed for the luxury customer,” he said.
Each restaurant stands on its own—Club 19 gastropub at the golf course; a Mediterranean-focused Aveo; or Sombra, the new Mexican-inspired poolside cantina, for example—while converging in the California Coastal vibe of the newly independent resort.
$420 Average
The resort’s average daily rates are $420, with occupancies of about 74% for room revenue of $45 million annually, industry sources said. Pullan confirmed an average rate in the “low- to mid-400s” and a “low-70s” occupancy.
St. Regis declined to give food and beverage revenue, but materials used to help sell the resort in 2007 and 2008 said it was $41 million to $45 million and 10% above room revenue—or about $50 million now.
The spa’s 30,000 square feet and 24 treatment rooms are similar in size to the Spa Gaucin it replaced but at a higher register of service.
High-end spas can bring $250,000 in annual revenue per treatment room, said Gary Henkin, president of spa consultant and operator WTS International Inc. in Rockville, Md.; that would come to about $6 million for Miraval at the Monarch Beach Resort.
The golf course produces another $6 million on rounds: 46,500 a year at $120 to $140 apiece, said its Scottsdale, Ariz.-based operator OB Sports. The course likely brings in another $1 million or so on food and beverage, according to Jeff Woolson, a golf course broker with CBRE in San Diego.
CBRE Hotels in Los Angeles said upscale resorts along California’s coast ended 2015 with occupancies of about 75%—which gives St. Regis an uptick or two to add.
Industry sources put average daily rates at local crown jewels Resort at Pelican Hill in Newport Coast and Montage Laguna Beach in the $575 to $600 range.
Those prices indicate the Monarch Beach Resort has some room to grow significantly from its current revenue, which appears to range upwards of $110 million.
The move to drop the St. Regis tie-up promises some savings, including an estimated $2 million to $3 million a year on management fees.
At a 7% capitalization rate, that’s bottom-line income that could add $28 million to $43 million to a future sale price—which gets into a range of what the recent two-year renovation cost.
Pullan said KSL has commonly held its properties for about a decade.
