Balboa Inn Is Sold, Will Be Renovated : New Owners Say They’ll Restore Hotel to Luxury Status It Once Enjoyed

The Balboa Inn, a 57-year-old beach hotel that has seen its charm tarnish with age, has been sold for $4.3 million to Griswold’s, a Costa Mesa-based management company, which plans to restore the 34-room inn to its former luxury status.

Although the sale is in escrow, Griswold’s said it is negotiating a joint partnership in the hotel, located near the Balboa Pier on Balboa Peninsula in Newport Beach, with a yet-to-be-named group of Los Angeles-area athletes and a group of Southland businessmen.

In a bid to attract executive guests, Griswold’s, which will manage the hotel and retain part ownership, plans to spend nearly $2 million renovating the structure and adding conference rooms and suites.

“Businessmen are getting tired of staying in boxes,” said Ray Sanford, president of Griswold’s. “The only way to tell the difference between a Marriott, Sheraton or Hilton is the sign out front.” He said the hotel will cater to executive conference groups with new concierge service, upgraded rooms and more meeting space.

The sale is part of the ongoing growth of luxury-class hotels in Orange County. But as the cost of building first-class hotels continues to escalate, local developers are looking at older hotels instead of building from scratch. Last month, the Newporter in Newport Beach was sold for nearly $30 million to Los Angeles-based Westgroup Hotels Inc., which plans to pump $5 million into renovation of the 57-year-old inn.

‘Cost Getting Prohibitive’

Vern Porter, vice president of Westgroup, said the move to renovate the Balboa Inn only underscores why Westgroup bought the Newporter and why other developers may take similar actions with other older hotels here. “The cost of building new hotels is getting prohibitive. The Orange County area may be reaching a point where it’s now time to concentrate on the old gems (hotels) and bring them back.”

Renovation at the three-story Balboa Inn, which has changed hands eight times in its history, is expected to begin immediately but will not be completed until early 1986. Although the hotel restaurant is now closed, some of the hotel’s rooms will remain open during the remodeling. Owners say the renovation will include construction of a lobby (the hotel has no lobby now), remodeling of attached commercial shops, conversion of most guest rooms into suites and addition of fireplaces to most suites.

The six commercial shops now attached to the hotel, which comprise 4,100 square feet of retail space, will be expanded into nine shops, owners say. New additions will include an art gallery, a gourmet kitchen supply store and a bicycle shop.

Third Hotel Venture

This marks Griswold’s third venture into the hotel business. The company, which posted 1984 revenues of $19 million, operates the 260-room Griswold’s Hotel Fullerton and the 280-room Griswold’s Hotel Claremont. The 75-year-old company, which began as a restaurant operation, also operates smorgasbord restaurants in Southern California.

Although the Balboa Inn often logs occupancy rates near 100% in the summertime, it suffers vacancy rates of up to 50% in the winter, according to Sherman Wang, who is selling the hotel to Griswold’s. Wang, who bought the hotel in 1978, said he has tired of the hotel business and is seeking new business interests.

Industry observers say the hotel fell into disrepair in recent years. Tiny bathrooms in guest rooms have not been remodeled. The outdoor swimming pool area has been allowed to decay. And new furnishings have not been added to guest rooms. Low overhead, however, has helped to keep room rates at the inn as low as $25 a night in the winter and $40 a night in the summer. During the winter season many of the hotel’s guests stay for weeks or months at a time.

$275-Per-Night Suites

All of that will likely change once the renovation is completed. Executive suites with ocean views could go for as much as $275 per night, said a Griswold’s spokesman. The number of employees at the hotel will quadruple from 10 to more than 40. An upscale restaurant with a 1930s motif will replace the Mexican restaurant now there. All guests will be served continental breakfasts in their rooms.

“It will be a 180-degree turnaround,” Sanford said. “Orange County has a real need for small, exclusive, out-of-the-ordinary hotels.”

The Balboa Inn was built in 1928 for $84,000 by Walt Hagedom, who also built Union Station in Los Angeles. The inn quickly became a peninsula landmark, attracting the international elite. During Prohibition, its guests included rumrunners who would walk to the beach in front of the hotel to pick up illegally shipped liquor.

By the 1940s, it was the host hotel for jazz greats who played at the neighboring Balboa Pavilion. Rolls-Royces commonly rolled up to the hotel’s front entrance, depositing such celebrity guests as Humphrey Bogart and Gary Cooper.