The Orange County Register
01/15/16

Hotel Deals: Pacific Hospitality Group Buys in Hawaii; Anaheim Firm Buys in San Diego
By Hannah Madans

http://www.ocregister.com/articles/hotel-700047-hospitality-new.html

The hotel boom for Orange County hospitality is already making waves in the New Year.

Irvine-based Pacific Hospitality Group has bought the oceanfront Ko’a Kea Hotel & Resort on Kauai. The property was named the most prestigious resort in Hawaii in Conde Nast Traveler’s “Top 25 Resorts in Hawaii: Readers’ Choice Awards 2015.”

Terms of the deal, which was announced Thursday, were not disclosed.

“It sits really nicely within our expanding portfolio of assets,” said Kory Kramer, PHG chief investment officer. “It’s our first purchase outside of California for the Meritage Collection, which provides diversity and gets us into the Hawaiian market, which we foresee growth in – and it’s a hard market to enter.”

Kramer said PHG plans to increase occupancy rates at the Ko’a Kea, which stands just above 60 percent. The hospitality group plans to increase marketing efforts and leverage existing clients.

The 121-room hotel includes nine suites, a fitness center, spa, pool and 11,170 square feet of meeting space. The hotel’s restaurant, Red Salt, serves seafood and locally sourced produce.

The hotel sits on the site of the former Poipu Beach Hotel, which was damaged by a hurricane in 1992.
PHG owns and/or manages 10 hotels in California, Hawaii and Louisiana.

An affiliate of Pacific Hospitality Group in September bought a hotel in the iconic French Quarter of New Orleans.

The affiliate, Cotton Exchange Investment Properties, bought AC Hotel New Orleans Bourbon/French Quarter from an affiliate of Dallas-based NewcrestImage for an undisclosed price.

Kramer said PHG likely would make more acquisitions by the end of the year, both in California and in new markets.

“We look for location; it’s very important to us,” Kramer said. “There are very few good deals, and so when we are able to execute on an opportunity like the Ko’a Kea, it’s something that is really part of our grand strategy.

“We have two platforms for growth,” Kramer added. “One is purchases like this: signature, trophy, coastal assets in higher barrier to entry markets … The other platform is hotels like the AC we purchased in New Orleans. Really cool lifestyle hotels that are really geared toward certain experiences.”

PHG’s portfolio includes Balboa Bay Resort in Newport Beach and the Pasea Hotel & Spa in Huntington Beach, which will open this spring.

In other hotel news, Anaheim-based Fortune Hospitality has bought Best Western Plus, a 78-room hotel in San Diego County, for $12.4 million or $159,000 per room.

Beverly Hills-based Sikand La Mesa Hotel sold the property.

The hotel is located at 9550 Murray Drive in La Mesa and has a pool and gym.

This is Fortune Hospitality’s first time buying a hotel, according president Alan Reay at Atlas Hospitality Group, an Irvine-based real estate company that specializes in the hotel industry.

In 2015, approximately $1.4 billion was spent on hotel purchases in Orange County, according to Atlas. Eight hotels were under construction while four opened, according to the firm.

Industry analysts predict the industry will continue growing in 2016 but at a much slower pace.