Renovations grant hotels staying power

Thursday marked the opening of the Newport Beach Hotel, a remodeled and renamed boutique hotel near the Newport Pier.

The ribbon cutting was the latest on a list of local hotels that have had some sort of face-lift, including complete rebuilds, remodels and redecorations.

“The old product in the marketplace needed to be refurbished — it was getting to be a tired product,” George Lysak, executive director of sales and marketing for the Balboa Bay Club, said about the local hotel industry. “In a community like this, there needs to be a nice, fresh product because it’s always been a growing market for groups and individual travel.”

With the surge of hotel makeovers comes a rise in hotel room rates. According to a July report by PKF Consulting, the average room rate in Newport Beach so far this year is more than $184 per night, an almost 14% increase from 2005. Naturally, during the summer months, rates are higher and in July 2006, the average rate was $205, which marked an 18% increase from the previous year.

Higher rates mean more tax revenue for the city. The transient occupancy tax is the city’s third-highest income source for the general fund, which goes largely to paying for public safety services including police, lifeguards and the Fire Department. Top on the list is property and sales tax, respectively. From August 2005 through July 2006, hotel visitors generated more than $11 million, about $2 million more for the same time period in 2005.

“I think in terms of our budget it does allow for us to provide more police, lifeguard and fire services as well as all the other services funded out of the general fund, including street maintenance, park maintenance,” said Glen Everroad, the city’s revenue manager.

Public services make up about 65% of general fund expenses.

Everroad expects the upward trend to continue, with the addition of the cottages at Crystal Cove, which are now transient occupancy tax producers, and eventually a new Irvine Co.-owned hotel at Pelican Hill.

The remodeling and rebuilding of hotels comes in cycles, Lysak said and Newport is reaping the benefits.

“They are a very, very important revenue generator to the city, not only in terms of the transient occupancy tax that visitors pay, but because of the increased property tax generated because the assessed values of the properties go up,” said Newport Beach City Councilman Keith Curry, who toured the Newport Beach Hotel at its grand opening.

One of the major reasons for the increase in occupancy and tax revenue generated is that this year most of the major hotels reopened their rooms to guests.

“One of the reasons that you get more tax this year, of course, is that the Marriott is back on line with all their rooms because they weren’t before,” Lysak said of the Newport Beach Marriott, which underwent a $70-million renovation.

The leader of the pack seemed to be the Balboa Bay Club, which underwent a complete rebuild and reopened in May 2003, making the once private club open to the public.

The Newport Beach Hotel, formerly the Portofino, is a 15-room boutique hotel, with the feel of a beach cottage. Prices are competitive with major luxury hotel chains, ranging from $250 to $650 a night, depending on the time of year and the room.

The hotel, which unofficially opened its rooms to the public in July, features two oceanfront rooms with huge windows and bathtubs overlooking the beach, deluxe rooms and suites, along with a separate building housing its villas.

“I think the owners have done a fabulous job,” Curry said. “It provides a very unique boutique hotel location with a fabulous site, and it helps further upgrade and revitalize the peninsula.”

The renovation happened quickly compared with other larger hotels and was completed in 40 days, working all day, every day, said president David Donaldson.

Donaldson designed everything himself, firing designers who tried to tell him the hotel should mirror the lifestyles of Miami or Los Angeles.

“I was walking … to El Ranchito for dinner with my family and I was thinking, ‘There are so many beach cottages around here,’ ” he said. “I thought, ‘This is exactly what we need to do.’ The town is more conducive to sailing town; it’s very classic, and I couldn’t imagine putting red chairs and lights all over the place.”

The Radisson, Hyatt Regency, the Island Hotel-Newport Beach, Marriott and the Fairmont Newport Beach all went through renovations and upgrades over the past year. The Marriott was the most expensive, with the Balboa Bay Club a close second.

The Balboa Inn and the Newport Beach Marriot Bayview are undergoing renovations now.