The first new ground-up hotels along the coast of Orange County since 2018 are set to break ground in about a year, following a key regulatory win for the project’s developers.
R.D. Olson Development, one of three Newport Beach-based firms operating under the Dana Point Harbor Partners banner, last month received California Coastal Commission approvals to build a pair of hotels with 299 rooms in total at the 53-year-old, county-owned harbor, which is in the early stages of getting a revamp whose total cost is expected to reach $550 million.
Plans call for construction of both Dana House, a 130-room, upscale hotel, as well as Surf Lodge, a more affordable, 169-unit select-service hotel.
Both properties will go up along a 9.5-acre site next to the water; their combined cost is expected to run about $160 million, according to Bob Olson, president of R.D. Olson, long one of the West Coast’s most active hotel developers. That works out to a price of roughly $535,000 a key.
“Dana House will celebrate the local culture of Dana Point, its history, and the locals who live in the neighborhood,” Olson told the Business Journal. “Surf Lodge will be for the more active guests.”
Additional city approvals are still needed, and the construction on the two hotels is expected to begin concurrently in about a year. Construction should take about two years, according to Olson.
Commercial, Dock Work
The massive overhaul of the Dana Point Harbor is one of South Orange County’s most notable real estate development projects in years.
Along with R.D. Olson, the development is being overseen by Burnham Ward Properties and Bellwether Marine. The trio of firms are operating together under a single ownership structure, the Dana Point Harbor Partners. The group in 2018 entered a 66-year lease to renovate and operate the property from the OC Board of Supervisors.
Bellwether, led by Joe Ueberroth, is overseeing a revamp of the harbor’s docks. That project’s currently about a third completed and should be about 50% done by the end of the year.
Construction work kicked off in February for the commercial core of the harbor.
Dubbed the “heartbeat” of the harbor by its developers, commercial core work will include a new, 984-space parking structure, followed by nearly 120,000 square feet of redeveloped restaurants and retail space, overseen by Burnham Ward, led by Scott Burnham and Bryon Ward.
The partnership secured nearly $60 million in financing from Citizens Business Bank near the start of the year for work on the project. Olson said additional funding will be raised as the hotel projects gets closer to breaking ground next year.
Coastal Challenges
The last sizeable ground-up, waterfront hotel in OC to open was Newport Beach’s Lido House, also developed and owned by Olson. Prior to that, the last new project along the water to open was Huntington Beach’s Paséa Hotel & Spa, another development spearheaded by Olson. It opened in 2016.
Waterfront projects require California Coastal Commission approval, which present “their share of challenges,” said Olson. “Many [projects] are approved, but not many are built.”
“Less experienced developers don’t always understand the complexities and how to make the projects work [financially],” in particular the requirement to add more affordable rooms to the mix, he said.
Surf Lodge daily rates are expected to run in the $150 to $250 range, depending on the season, while Dana House will be closer to $500 to $600, according to Olson.
Other stipulations for the Dana Point hotels include programs to serve underprivileged youth and disabled people and water safety programs. The community benefits package that was negotiated as part of the deal will invest more than $6 million in OC-based service organizations over the life of the project, according to Supervisor Katrina Foley.
It took nearly four years of work to get the Dana Point project through the Coastal Commission; Lido House took about a year to get approvals.
Lido House Lessons
Expect to see many similarities between the upscale Dana House hotel and Lido House, a boutique property that was built on the site of Newport Beach’s former City Hall.
Both hotels will count the same number of rooms, 130, and feature a rooftop bar and lounge. Dana House will also have a rooftop restaurant with sunset views.
All rooms at both Dana Point projects will have waterfront views, according to Olson. The Surf House aims to have a “younger, hipper vibe,” with its own pool and lounge, as well as areas for barbequing and storing beach equipment. “It’s going to be a really fun hotel,” he said.
Lido House falls under Marriott’s Autograph Collection of independent hotels, and numerous Olson properties have ties to the Marriott brand. However, no decision has been made on an operating partner for the Dana Point properties, Olson said.
“In 12 months or so, we’ll dial that in,” he said.
