Global Investment Firm Looks To Compete for Visitors With New Luxury Annex at Hotel del Coronado
By Lou Hirsh CoStar News September 21, 2022 | 12:35 P.M.
Blackstone Group completed the final phase of a $400 million expansion and renovation of the iconic, 134-year-old Hotel del Coronado, among the nation’s oldest continuously running hotels, as operators look to capitalize on San Diego’s rebounding tourism economy.
New York-based Blackstone’s latest addition to the 1888-vintage property at 1500 Orange Ave. in Coronado, California, which it acquired in December 2015 as part of a larger nationwide $6 billion portfolio, is a newly opened section called Shore House at The Del. The addition added 75 luxury rooms to the property’s existing 759.
Blackstone Real Estate Managing Director Brian Kaufman said in a statement the Shore House annex was built at a cost of $153 million, adding 125 new jobs to the resort property’s payroll. It followed earlier improvements completed by Blackstone as part of a larger master plan of renovation projects at the Coronado property.
The global investment giant has been spending much of 2022 bolstering its hospitality portfolio with deals including its $6.3 billion acquisition of Australian hotel and casino operator Crown Resorts Ltd. It has also made big investments in companies such as Bourne Leisure, Signature Aviation and Extended Stay Hotels.
“We are now seeing a robust recovery in global travel,” Blackstone President Jon Gray told analysts during a quarterly earnings call in July.
The beachfront, Victorian-style Hotel del Coronado opened in 1888 and has undergone numerous renovations and expansions over the decades, while maintaining many of its original late 19th-century design elements, including its distinctive turrets.
Currently managed by Hilton Hotels under its Curio Collection brand, Hotel del Coronado has long been known for celebrity sightings and was the shooting location of numerous major TV shows and movies over the years. It was featured most prominently in director Billy Wilder’s hit 1959 comedy “Some Like It Hot” with Marilyn Monroe.
San Diego Market
With its latest investments in the vintage property, Blackstone is looking to remain competitive in a San Diego region that has traditionally been among the nation’s most active for year-round tourism. Like many destination cities, it was hit hard by travel and hotel shutdowns in the first year of the pandemic, though conditions have improved significantly in the past year.
CoStar Market Analytics data as of Sept. 20 shows the area that includes Hotel del Coronado, a short ferry ride across the bay from downtown San Diego, has a current hotel occupancy rate of 80.3%, up 13.4% from a year ago. Average daily room rates are up 12.9%, and revenue per available room, a key hotel performance metric, has increased 28% in the past year.
The San Diego region racked up a total of $1.2 billion in hotel revenue in the past 12 months, nearly doubling the year-earlier tally, CoStar data shows.
Emmy Hise, senior director of hospitality analytics for CoStar, said the San Diego region’s total hotel occupancy remains slightly below pre-pandemic levels, though the closely watched group occupancy category has exceeded 2019 levels for the past two months. That is “a feat few markets have achieved,” Hise said.
“Hotel recovery in the San Diego market has been quicker and more robust than most other California destinations, with both hotel rates and RevPAR fully recovered,” Hise said. “Hotel performance has been driven by leisure travelers and, more recently, a resurgence in conferences and conventions.”
With rooms starting at $1,299 per night, Hotel del Coronado’s new Shore House annex also has three new restaurant and bar offerings including a full-service swimming pool lounge. There is a dedicated entrance with new concierge services and an area offering wellness programs, including beach yoga and personal training.
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