Investment in hotel development in Huntington Beach hit at least $300 million last year—and there’s more in store this year.
Projects include:
• A second tower under construction at Waterfront Beach Resort, A Hilton Hotel that’s scheduled for a June opening and will add 152 rooms to the 285-room property.
• Hyatt Regency Huntington Beach Resort & Spa’s plans for a late-2017 start on renovating its 517 rooms; hotel public spaces and restaurants were revamped in 2014.
• The boutique Kimpton Shorebreak Hotel’s addition of meeting space, the relaunch of its restaurant and an update its 157 rooms beginning this month.
• Paséa Hotel & Spa opening its 250 rooms Memorial Day weekend and hitting 2017 as the ‘veteran’ of the four key hotel properties in the city.
The $300 million or so that went into those project doesn’t count an estimated $135 million spent to build the Pacific City retail and restaurant center near Paséa—and that excludes the value of a 516-unit apartment complex rising behind both, where units are scheduled to open in phases through this year.
“The city is coming into its own,” said Robert Mayer Sr., whose family trust owns the Hilton and co-owns the Hyatt. (see related story, page 8). “The city’s got a great history and now it’s becoming a resort community. It makes the city that much better, and competition keeps everyone on their toes.”
The tally could grow if a long-term—and longshot—effort succeeds.
Irvine-based Shopoff Realty Investments in August paid about $27 million for 29 acres just south of the four hotels. The site is a former oil storage facility and faces significant development hurdles.
Developer Bill Shopoff’s early plans suggest a development in the $500 million range—a mix of commercial, residential and hospitality that’s likely to take at least three to four years to get through planning, entitlements, and California Coastal Commission scrutiny.
Do Over
The work represents forward progress after several false starts between about 1998 and the recession that kicked in in 2008.
A developer that owned the 31 acres that include Paséa, Pacific City, and the apartments—which are now owned by three different entities—got approval for an $850 million project before going bankrupt as the recession gripped the market.
A luxury W Hotel was in the works for part of the land—but didn’t get past “twisted, rusted rebar” as one hospitality local recalled the abandoned project.
The land where Hilton’s second tower is now rising was at one time expected to hold a third hotel by 2011. Mayer Corp. from 2012 to 2014 instead got city planning and entitlement nods to expand the current hotel.
“Significant money is being spent to improve the destination” of Huntington Beach, said Robert Mayer Jr., chairman and chief executive of Mayer Corp. “Between San Diego and San Francisco, there isn’t a coastal city enjoying the revitalization that Surf City is doing with all of these new projects.”
Two Towers
Hilton’s project got a $140 million land and financing deal in February of last year and is on an aggressive timetable.
It broke ground on the tower in the spring, topped it off in November, and is scheduled to open in June. The 152 rooms include 131 suites.
The hotel’s overall work is extensive and includes a spa, underground parking, rooftop lounge, and new ballrooms, restaurants, event spaces to include an outdoor lawn area in addition to meeting rooms.
“We’re adding nearly 30,000 square feet” of meeting space, said Director of Marketing & Advertising Scott O’Hanlon. The total will be about 48,000; sister property Hyatt has 57,000.
The two hotels will combine for more than 950 rooms.
Rooms Serviced
Robert Mayer Jr. said Hyatt’s room renovation will cost an estimated $11 million.
Mayer Corp. and Hyatt staff didn’t have details on the project yet. The work comes after new restaurants and public areas a few years back—its Watertable restaurant now sports a waiting area that doubles as a hotel library—and more recent renovations to one of the hotel’s pools.
The Shorebreak starts this month on its room renovation and new restaurant.
Maryland REIT DiamondRock Hospitality Co. bought the hotel in February 2015 for $59 million and named Kimpton to run it. The renovation will add about $3 million to the investment: new fixtures, carpeting, and softgoods in rooms, plus the restaurant work.
Capacity in the restaurant will drop from 140 to 60 for, the hotel said, quieter and more intimate dining—its new name is Pacific Hideaway—and more meeting space: a 25% bump from 8,800 square feet to 11,000.
The restaurant is “modern American and taps the surf cultures of Southeast Asia, Latin America, and Japan,” said Lizzie Raudenbush, who directs Shorebreak’s sales and marketing
Colors are “vibrant and funky” in the tiled dining room, and private dining areas will be added, she said.
Air Porsche
The rising tide of boutique and luxe hotel development brought high-profile events to the city.
The Breitling Huntington Beach Airshow drew an estimated 560,000 attendees over its Oct. 21 to 23 run.
Paséa General Manager Scott Blakeslee said the event came together quickly; the hotel’s room block included personnel from sponsor Breitling, a watchmaker; and Paséa’s amenities saw more business.
“We had lines out the door trying to get into the Treehouse [lounge],” he said. “The pool was packed; every cabana was sold.”
An event spokesperson said hotels sold out that weekend; next year’s event is Sept. 29 to Oct. 1 and includes the famed Blue Angels flyers.
A second event was for Porsche AG, which in 2016 debuted an experience center and test track in Carson and a redesigned Panamera luxury sedan at dealerships.
Porsche brought 3,500 of those dealers to Huntington Beach—most stayed at the Hyatt—on a rolling four-week schedule from the Friday after Thanksgiving to the Friday before Christmas.
“The Hyatt did a sand sculpture of Santa riding in a convertible Porsche,” said John Ehlenfeldt, executive vice president of sales for the city’s destination marketer, Visit Huntington Beach.
Results
Funds flow into city coffers via upscale hotel development: Tourism dollars fund civic improvements.
“If you want a fire station (for residents), build a hotel,” said Ehlenfeldt.
Huntington Beach collects a local slice of sales taxes and a 10% TOT—the transient occupancy tax, also known as a “bed” tax, levied on hotels based on room rates—from hotels and related developments.
The city’s sales tax take in 2015 was $4 million and is expected to grow with Pacific City revenue.
TOT revenue has grown from $7.5 million to $9.8 million over the city’s last three fiscal years.
Paséa kicked up receipts a notch with its May 2016 opening and contributes a full year this year; new Hilton rooms will add to year’s results.
Upgrades at Hyatt and Shorebreak and a steady hotel market presage price increases to produce additional TOT money, even without expansion, since the tax is on room rates.
Hotel revenue had grown 7% annually since 2011—before recent hotel work was done—according to a study by Wayne, Penn.-based Tourism Economics commissioned by Visit Huntington Beach.
