This is part of San Manuel’s diversification away from its legacy business, the Yaamava’ Resort & Casino at San Manuel.

By JONATHAN LANSNER | jlansner@scng.com | Orange County Register
PUBLISHED: June 5, 2023 at 10:23 a.m. | UPDATED: June 5, 2023 at 6:00 p.m.

The San Manuel Band of Mission Indians, owners of the Yaamava’ casino and hotel in Highland, are gambling on the high-stakes Orange County luxury resort market.

San Manuel announced Monday, June 5, that it bought a 40% stake in the Waldorf Astoria Monarch Beach Resort & Club in Dana Point. The 400-room, five-diamond hotel campus sits across the Pacific Coast Highway from the ocean on 162 acres.

The tribe is partnering with Ohana Real Estate Investors, which paid $497 million for the resort in Dana Point in 2020. The property includes a six-acre private beach club, three swimming pools, and its own 18-hole golf course.

Ohana and San Manuel did not disclose the dollar amount of the investment but noted the tribe has “the option to increase its ownership through one or more future transactions.”

The complicated history of the Dana Point resort highlights the gyrations of the luxury resort business.

It opened in 2001 under the St. Regis hotel chain, and after several ownership changes, dropped the brand in 2016. It was known just as the Monarch Beach Resort until the Ohana acquisition.

The switch to the Waldorf Astoria brand – a luxury slice of the Hilton chain – was an early move in Ohana’s ownership. And last year, Ohana finished a $30 million makeover of the resort’s guest rooms.

“We are impressed with Hilton and Waldorf Astoria’s strategic repositioning of the property over recent years,” said San Manuel chairwoman Lynn Valbuena.

Growth plan

San Manuel is spreading its hospitality bets away from its legacy business, the Yaamava’ Resort & Casino at San Manuel.

One such high-profile move was becoming the first Native American owner of a casino resort in Las Vegas. It paid a reported $650 million for the Palms Casino Resort in 2021.

“Investing in a luxury destination resort such as Waldorf Astoria Monarch Beach represents another milestone for our tribe, enabling us to continue executing our long-term diversification strategy,” Valbuena said San Manuel.

Hotel analyst Alan Reay of Atlas Hospitality notes San Manuel has also invested in non-casino lodging properties such as Bear Springs Hotel in Highland and a Residence Inn in downtown Sacramento. The tribe also has investments in hotels in Washington, D.C., and Charlottesville, Virginia.

The Waldorf, Reay says, “is a good strategic move.”

Irreplaceable real estate

High-end lodging in Orange County is a premium investment because of its limited supply.

“It is extremely difficult, if not impossible, to duplicate these resorts,” Reay says. “It’s irreplaceable real estate.”

Last year Texas billionaire Tilman Fertitta paid $641 million for the oceanview Montage Laguna Beach, just north of San Manuel’s Dana Point investment.

The Montage also has a meandering ownership lineage, including its 2015 purchase by Strategic Hotels for $360 million. Fetitta’s deal for the 250-room Montage luxury resort translated to $2.5 million per room – the second-highest in state history.

Reay says the nearby Waldorf’s value is lower because of its slightly inland location, but he pegs it at roughly $600 million, or $1.5 million per room.

California hotel investments have remained robust as the tourism industry recovered from its pandemic challenges.

In 2022, 483 hotels sold statewide – the second-highest number but down 5% in a year, according to Atlas Hospitality. Investors paid a median price per room of $151,636 – an all-time high after a 10% jump from the previous record set in 2021.

Yet Reay notes the hotel industry faces significant questions even with a huge upswing in the tourism business.

“Most investors don’t think it’s sustainable,” he said.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com