The new owners of Bacara Resort & Spa in Goleta plan to spend millions of dollars to upgrade the 78-acre coastal resort.
On Feb. 25, Irvine-based Pacific Hospitality Group confirmed it had purchased the 360-room Bacara Resort from Ohana Real Estate Investors and Rockpoint Group for an undisclosed amount.
The deal marks a successful turnaround for Ohana, which in July 2011 snapped Bacara up at a bargain price from New York-based developer ADCO Group. Ohana purchased the property for an estimated $104 million — about half of the resort’s construction cost.
“It’s an incredible asset. It’s one of the best coastal resort properties in California. When the opportunity presented itself to us, we of course took every opportunity to make the deal work,” Pacific Hospitality Chief Investment Officer Kory Kramer told the Business Times. “We saw that it would fit perfectly with our other hotel properties in California.”
Pacific Hospitality is an experienced investor in high-end coastal hotels. The company had been negotiating a deal on Bacara since late last year, Kramer said.
Bacara opened its doors in 2000, after more than a decade of planning. Over the past 13 years, the property has drawn celebrities such as Oprah Winfrey and Michael Jordan and hosted high-profile events including Federal Reserve conferences and the Wall Street Journal’s annual “Eco:nomics” summit on energy and the environment, an invitation-only event that takes place later this month. Billionaire Warren Buffett has also hosted conferences on wealth and philanthropy there.
Kramer said Pacific Hospitality plans to further ramp up mid-week, corporate and conference business at the resort. The company plans to spend at least $5 million on upgrades at the oceanfront property, he said.
Pacific Hospitality has acquired three California coastal hotels in the past 15 months as part of its newly-formed Meritage Collection, which also includes Estancia La Jolla Hotel & Spa in San Diego, Balboa Bay Resort in Newport Beach and The Meritage Resort and Spa in Napa. The company also owns properties operating under the Crowne Plaza and DoubleTree flags.
Kramer said that although each of the hotels in the Meritage Collection are independently branded, the properties will do cross-marketing and other promotions.
At 360 rooms, Bacara is tied with Fess Parker’s DoubleTree resort in Santa Barbara as the largest hotel in the Tri-Counties.
When Ohana purchased Bacara a year and a half ago, occupancy rates at the hotel were reportedly sagging. Ohana, a Bay Area-based investment firm described as being owned by a wealthy Silicon Valley family, brought in a new management team, re-established ties with the South Coast community, and rode a resurgent wave of tourism and business travel to mount what appeared to be a successful turnaround.
“The economy hurt everyone, and the previous owners weren’t the best owners. The resort really kind of shut down,” General Manager Kathleen Cochran told the Business Times in October 2011, shortly after Ohana hired her to help turn the struggling property around. “But I really think the original owner and developer had a great vision. I’ve been around the block, I’ve seen a lot of hotels, and still I just want to pinch myself when I walk around and see how beautiful this place is.”
Ohana also worked to fix several construction issues at the resort that had put some of the poolside rooms out of commission. “Ohana has done an excellent job over the last couple of years of fixing those construction issues through a construction remediation program,” Kramer said. “We’re the beneficiaries of that. All of those problems will have been taken care of.”
Reports of a possible buyer for Bacara surfaced more than a year ago, but talk had quieted down until recent weeks, when sources told the Business Times that Pacific Hospitality was a potential buyer.
Cochran will stay on board to lead the resort, as will most of the management team, Kramer said. He did not say how many staff would be affected overall. According to Business Times records, the resort employed 598 people as of 2012. Bacara will continue to operate under the same name.
Winery mogul Bill Foley, a Pacific Hospitality Group investor, took a minority stake in Bacara as part of the purchase. The resort is now part of his Foley Food & Wine Society program, which offers discounts, rewards and exclusive experiences to its members in an efforts to cross-promote his wineries.
Foley’s involvement is part of a push to take advantage of Bacara’s location at the gateway to the Santa Ynez Valley, Kramer said. “We’d like to really position Bacara as the launching point into Santa Barbara Wine Country,” he said.