Pacifica Hotels, Eastern Real Estate team up on hostel takeover
Santa Barbara’s latest hospitality development recently opened its doors to a flurry of tourists looking for budget accommodations. The Wayfarer, a 31-room, 101-bed hostel at 12 E. Montecito St. is the newest project to drop into the city’s Funk Zone.
The project is the result of a deal between the city and the late developer Fess Parker. In that deal, the Parker family had to build a budget hostel in Santa Barbara to gain approval for its new boutique hotel project, slated to be built on Cabrillo Boulevard, next to the 360-room Fess Parker’s DoubleTree Resort.
Last week, Santa Barbara firms Pacifica Hotels and Eastern Real Estate purchased the hostel from the Parker family. The deal had been in escrow for almost a year before closing, Pacifica Hotels President Matt Marquis said in an interview.
Pacifica Hotels operates dozens of hotels in coastal California, as well as properties in Hawaii and Florida. Eastern Real Estate has been a prolific developer and investor in commercial property in downtown Santa Barbara, particularly in the Funk Zone, where it was a partner in the Anacapa Street project anchored by The Lark restaurant.
Pacifica Hotels, a subsidiary of Santa Barbara-based Invest West Financial Corp., joined the project as an operator, but ended up making a “sizable” equity investment in the project, Marquis said. “The Parkers and Eastern Real Estate put the deal together … we came in as the expertise in developing the project, which was basically just a shell when we got it,” Marquis said. “We run a number of other hotels, but coming to this project we had to educate ourselves on how to sell beds versus rooms.”
The company also hired a property general manager out of Hostelling International, a membership organization that brings together hostel information and resources from all over the world.
While the term “hostel” might recall some wild and harrowing experiences for the well-traveled, the Wayfarer, still very clean and new, is definitely not the cot and pot-type living some rubber tramps know too well. Group rooms feature five memory-foam mattress beds, flat-screen TVs built into the walls and other comfy accoutrements. There’s a pool that looks over lower State Street and bike rentals are on the way. And there is a large, well-equipped kitchen where guests can cook meals and store food away in personal lockers. Private rooms are outfitted with the same built-in flat screen TV, private shower, queen-size bed and a Murphy bed that lets the room sleep up to three people.
Depending on the season, beds and rooms can run between $59 and $200 per night.
“We definitely think there is a market here for the discerning traveler that is happy to pay $59, $79 or $89 for a bed,” Marquis said. “There are definitely people who want to have that social experience of hostel and also have a really nice room. … I think we’re going to find that people really like the vibe here.”
Pacifica is also looking at cross-marketing opportunities with other area businesses. Early talks with the nearby Guitar Bar, a high-end guitar retailer, include offering some incentive for groups who come in for guitar camps. “There are a lot of opportunities out there,” Marquis said. With very little marketing since opening, the hostel is running at 80 percent occupancy, he said.
Pacifica is looking to take the hostel model it has established in Santa Barbara to other markets. “We definitely think there are more places to take this type of product,” Marquis said.
$24M RESIDENTIAL PROJECT IN VENTURA TAKES SHAPE
A $24 million residential development is taking shape in Ventura. The 59.5-acre site at Telegraph and South Wells roads was purchased by J. FAM in 2011 and CBRE Capital Markets Debt & Structured Finance Group secured the financing. The fully entitled project plans call for 110 townhomes and condo units and 224 single-family homes. Other features include parks and bicycle pathways.
The financing carries a two-year loan term with two six-month extensions funded by U.S. Bank. Sharon Kline and Marina Massari of CBRE represented the borrower in the deal.
DEAL OF THE WEEK
• PetSmart is coming to Santa Barbara. Lee & Associates Central Coast said it negotiated a 10-year, $2.6 million retail lease at 222 N. Milpas St. in Santa Barbara with the pet goods retailer, which will sublease 8,367 square feet from The Fresh Market.
• Contact Elijah Brumback at firstname.lastname@example.org.