Two years after the historic Hotel Mar Monte was rebranded as the Hyatt Santa Barbara, the property has changed hands for more than $60 million.
Chesapeake Lodging Trust, a Maryland-based hotel investment company, purchased the 171-room hotel from a Hyatt Hotel Corp. affiliate for $61 million, or $305,000 per room. In a July 1 announcement, Chesapeake said that in addition to the waterfront hotel, it has also acquired two adjoining properties, the 24-room Parkside Inn and a five-villa apartment building that’s used mostly as a monthly rental property. The hotel is located at 1111 E. Cabrillo Blvd. in the waterfront area of Santa Barbara, across the street from the beach, and the other properties are adjacent to it.
Bruce Baltin, senior vice president at hotel research company PKF Consulting, said the $300,000-per-room Hyatt fetched from the sale is on par with other recent hotel transactions. “It’s definitely a seller’s market,” he told the Business Times, adding that Hyatt was in a good position to sell the property, especially after it completed a multimillion-dollar renovation last year. “But it sounds like it’s a pretty fair price [for both parties].”
The real estate market for hotels in Santa Barbara has been on the rebound over the past several years, Baltin said. He said the Santa Barbara region as a whole is doing very well, although the city itself is faring better than Carpinteria and Goleta, where there’s been a bit of a slowdown. The Hyatt transaction comes four months after Bacara Resort & Spa, one of the region’s priciest hotels, was sold to Pacific Hospitality Group for an undisclosed sum. Downtown Santa Barbara’s Canary Hotel was also involved in a major sale last March, when it was sold to Kimpton Hotels & Restaurants for $40 million. There have also been a few smaller transactions in recent months, including the sale of the Holiday Inn Santa Barbara-Goleta for $24 million last month.
Chesapeake, Hyatt’s new owner, said it has a management agreement with HEI Hotels and Resorts to operate the hotel under a franchise agreement with a Hyatt affiliate. A spokesman from Hyatt Santa Barbara said the hotel will continue to be branded as a Hyatt and there will be very few changes to the property.
Chesapeake did not return multiple requests for comment from the Business Times.
The sale comes about two years after the historic 80-year-old Hotel Mar Monte was renamed Hyatt Santa Barbara and became the city’s first property operating under the brand name.
The Pritzker family founded Hyatt in the 1950s and still retains more than 60 percent of the company’s shares. Members of the family have owned and operated Hotel Mar Monte since 1986. But the hotel didn’t operate under the Hyatt name until two years ago, when the hotel officially started waving the Hyatt flag.
In 2011, Hyatt began a $12 million renovation to bring the property up to the Chicago-based hotel chain’s standards. When the company changed the hotel’s name and began to revamp the property, it retained all of Hotel Mar Monte’s employees except the general manager; Barry Prescott became the head of the newly-rebranded hotel at the time of the acquisition.
It was renamed Hyatt Santa Barbara in July 2011, after about half of the renovations were completed. Since then, the hotel company has revamped every guest room, in addition to the lobby, corridors and 10,000 square feet of meeting space.
“We recognized the hotel’s long-term potential when we acquired it and leveraged our expertise in architecture and design to further increase its market value. We are delighted to be deepening our relationship with Chesapeake and leveraging that higher market value to recycle capital while maintaining a long-term brand presence in the market,” Stephen Haggerty, global head of real estate and capital strategy for Hyatt, said in a news release.
Chesapeake President and CEO James Francis said in the release that there’s minimal work to be done after Hyatt’s extensive renovations. One change the investment company is making is to create a new design and service concept for the hotel’s restaurant, Bistro 1111. It also said it has initial plans to renovate the five-villa apartment building it acquired and convert it into a luxury all-suite building.
In the news release, Francis said his firm is continuing to expand its relationship with the well-known hotel chain. The company acquired Hyatt Fisherman’s Wharf, a 313-room hotel in San Francisco, for $103.5 million about a month before it announced the Santa Barbara deal. In March, Chesapeake bought the 185-room Hyatt Place New York Midtown South in Manhattan for $76 million.
The Hyatt Santa Barbara marks the company’s fifth Hyatt property. Chesapeake, a publicly-traded real estate investment trust focused on investing in upscale hotels in the U.S., owns a total of 20 hotels.