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Hotel’s Magnetic Personality to Get Even More Drawing Power

PACIFIC HOSPITALITY GROUP LLC

CEO: Timothy Busch.

President: Steve Arnold.

Financial data: Not disclosed.

No. of local employees: 244.

Headquarters: Irvine.

Year founded: 1997.

Company description: Owner and operator of seven hotels, including properties in San Diego, Napa and Orange County.

Key factors for success: Company emphasizes “cluster strategy” in certain regions to grow market share via acquisition, renovation and repositioning of hotels.

Pacific Hospitality Group LLC, the new owner and operator of Estancia La Jolla Hotel & Spa, plans to follow up its recent $41.7 million purchase of the luxury property with a $3 million renovation, expected to begin this summer.

Kory Kramer, vice president of acquisitions for the Irvine firm, also known as PHG, said the 210-room hotel will remain open during the renovation process, which will conclude by year’s end and eventually include the property’s lobby, guestrooms and dining areas.

PHG, which now owns and operates seven hotels throughout California, purchased the La Jolla resort in November from Lowe Enterprises, which developed and opened the property in 2004. The new owner then took over management of the resort in late January.

Checking Out Local Properties

The company has generally favored a “clustering” strategy in its acquisitions — it owns three hotels in the Orange County market — and Kramer said PHG will be scouting the San Diego region for more acquisition opportunities in coming years.

The privately held company does not divulge financial data on properties, but Kramer said the Spanish hacienda-style Estancia has revenue dynamics similar to its Napa property, The Meritage Resort and Spa. The La Jolla resort consistently generates as much business through corporate and group meetings, and special local events, as it does from selling room nights.

“It has a very good mix in terms of the revenue flow,” Kramer said of Estancia. “It’s actually stronger on food and beverage revenue than room revenue.”

The property has more than 21,000 square feet of meeting space, and a garden setting that has made it popular for gatherings such as weddings.

“Weddings are a very important part of the mix there,” Kramer said. “It’s not unusual for the property to have three weddings in a weekend.”

Estancia General Manager Terry Buchholz said the hotel employs 244 and averages around 74 percent occupancy for most of the year, rising to 85 percent in summer months.

Starting around August, PHG will be reconfiguring the property’s lobby so reception desks face visitors as they arrive, and the lobby is being redesigned to encourage socializing, with garden elements and more natural lighting.

Around November, Buchholz said operators plan to begin renovating guestrooms, which will be updated with new bedding, furniture, carpeting, drapes and other elements. Also in the works is a reconfiguring of the property’s popular Mustangs and Burros restaurant, which is being configured to boost its kitchen’s efficiency and allow for more outdoor patio dining.

In 2013, PHG plans more renovations, including a reconfiguring of the Estancia’s main ballroom to increase seating, and a revamping of spa facilities to allow for more outdoor garden treatment areas.

“This is the property’s first significant renovation, so it’s going on eight years now,” Buchholz said.

Several San Diego County hotels have recently been undergoing various degrees of renovation, ranging from an $8 million refurbishing taking place at Hotel del Coronado, to a $20 million makeover under way at Rancho Valencia, to a five-year, $200 million overhaul in progress at Marriott Marquis & Resort in downtown San Diego.

Time for a Change

Alan Reay, president of brokerage and consulting firm Atlas Hospitality Group in Irvine, noted that an improving economy is prompting hotels of all sizes to undertake renovations, including many that held off during the depths of the Great Recession.

Some franchisees of low- and midpriced chain-brand hotels are under pressure from brand operators to renovate and update, or otherwise risk losing their banners.

Meanwhile, independent operators of upscale properties have been under less financial strain since luxury hotels have generally bounced back the strongest in recent months. Yet, they are still investing in renovations to remain competitive in their markets.

“There’s a tremendous amount of renovations going on right now for hotels, and it’s going to continue,” Reay said. “Companies that do work on hotel renovations should do pretty well over the next four or five years.”

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