Newporter Ups Renovations to $15 Million

The Newporter Resort, the hotel that first established Orange County as a resort destination, is suddenly swinging a $15-million fist at its upstart competitors--in the form of wall-to-wall renovation.

With the luxurious Ritz-Carlton and soon-to-open Four Seasons hotels knocking at its 23-year-old doors, the long-sleepy Newporter has awakened from its slumber with plans to triple the scope of a $5-million renovation announced last March.

The upgrading is yet another clear signal of the ongoing evolution of world-class hotels in Orange County. Although the Ritz-Carlton now sits virtually alone in that coveted category, industry analysts contend that by the end of this decade Orange County could have a handful of creme de la creme hotels, ranking it as a resort destination comparable to Santa Barbara, Palm Springs and Hilton Head, S.C.

A Lofty Goal

In keeping with that lofty goal, partners Columbia Savings and Westgroup Inc.--the two Los Angeles firms that bought the Newporter for $26 million last February--intend to recast the image of the Newporter from that of a resort past its prime to one of a top-notch resort smack in the middle of a business environment.

But unlike the Ritz-Carlton, where the code word is jackets and ties, the Newporter will remain a spot where guests can flaunt their beachwear in the restaurant and tennis shorts in the lobby. “If you want to put on your white ties and tails, you go to the Ritz (-Carlton),” said Seymour Fagan, executive vice president of Columbia Savings. “But if you want to be comfortable, you come here.”

Industry analysts agree that changes at the hotel are long overdue--and that the Newporter is a name worth sinking money into. “The Newporter name is very strong, not just locally but worldwide,” said Joseph G. Kordsmeier, an industry consultant in Carmel Valley, Calif. “But they must put the ‘80s look into the hotel.”

To do that, the owners plan to completely remodel 311 existing guest rooms and add another 104 rooms in a brand new wing. The Newporter will then surpass the Ritz-Carlton, which has 394 rooms, as the largest resort hotel in the Southland.

June Completion Date

The renovation, which began in March, is scheduled to be completed in June. The hotel remains open during the construction work. “We’re doing a lot more than redecorating. We’re basically gutting the place and starting over again,” said Patrick R. Colee, chairman of Westgroup Inc. Westgroup has a penchant for renovating vintage hotels and is now putting a new $135-million face on the Biltmore in Los Angeles.

At the Newporter, Westgroup will spend $1 million on a new entrance way and lobby, with plans to triple the size of the present lobby. Also, a lobby fountain will spout water and a giant fireplace will give guests the cozy feeling of “being home in their living rooms,” Colee said.

Adding a new dimension to the Newporter’s atmosphere, entertainment will be featured in the lobby from afternoon through late evening. In the past, said Jim Manion, the hotel’s managing director, “the lobby was just a place that guests passed through on the way to their rooms.” But no longer. Such niceties as free newspapers and croissants will be available in the lobby.

Also, a third swimming pool and second spa are being added to the hotel. There are even thoughts of eventually converting a portion of the 26-acre hotel into a full-fledged health resort, said Columbia Savings’ Fagan. “But that’s a ways off,” he said.

Image Change Planned

The new owners hope to not only remodel the hotel but to also revamp its stodgy image. For years, the Newporter has been mostly recognized as a place where the rich go to play. Celebrities such as Bob Hope and John Wayne, along with politicians such as Richard Nixon and Ronald Reagan, have swung rackets on its tennis courts and golf clubs on its putting greens.

Now, with occupancy levels near historic lows, the hotel’s owners hope to appeal to a broader market segment. Occupancy has slumped to about 60%, contrasted with a 70%-plus occupancy rate at many other hotels in the John Wayne Airport area.

As a result, the Newporter, for the first time, will strongly court the corporate market--a move that competitors and analysts contend is a must for a hotel only minutes from the county’s business center and John Wayne Airport.

“The corporate base in Orange County is growing weekly,” said John Toner, director of marketing for the competing Ritz-Carlton. “They (Newporter) had to reposition themselves.”

‘More Group Business’

The Newporter’s new owners agree. “There was virtually no corporate base when we took over,” Colee said. “We have to have more group business.”

It will not be easy. The Newporter has long been an anomaly in Orange County. Where most local hotels see their biggest business on weekdays, the Newporter has always counted on weekends for the crowds. Many guests drive down from the Los Angeles area to “escape” for the weekend. But weekday vacationers are getting harder to find. That is why the Newporter must now chase more corporate accounts.

Only 20% of the Newporter’s business is corporate-related. The hotel hopes to increase that number to 50%, Manion said. Comparatively, 60% of the Ritz-Carlton’s business is pegged to business clients.

In seeking more corporate accounts, the Newporter has nearly doubled the size of its corporate marketing staff (to seven from four) and will nearly triple the size of its annual advertising campaign to $400,000 from last year’s $150,000, Manion said.

Room Rates to Rise

All of these changes will result in higher room rates at the Newporter, but the rates will still be well below the competition. The lowest single-room rate at the Newporter is now $97 and will be bumped to $110 in June. But the lowest room rate at the Ritz-Carlton is $170 and the lowest-priced rooms at the soon-to-open Four Seasons will be $140.

In mid-March, just one month before the Newporter completes its renovation, the 319-room Four Seasons is scheduled to open within eyeshot of the resort. Four Seasons, regarded as one of the top hotel chains in the world, is hardly shying from the competition. “The Newporter has a good name, but to stay competitive, they had to spend money,” said Klaus Tenter, general manager of the Four Seasons. “If they hadn’t, they would have lost market share.”

But Jim Kelley, president of the Irvine Hotel Co., a division of the Irvine Co., said there is room for everyone. That, he said, is because the quality of resort hotels is often more critical than their locations. For example, the Ritz-Carlton, almost overnight, has converted Laguna Niguel into a resort community, he said.

“The capacity for expansion of resort hotels in Orange County is almost unlimited,” he said. But, he added, “you can’t have resort hotels shoulder to shoulder down the coast.” Over the next 10 years, the Irvine Co. has tentative plans for up to five resort-type hotels on the 3,000 acres it owns along the Orange County coast, he said.

Fierce Competition

With such fierce competition in the wings, this is not the first attempt at renovation by Newporter owners. A former owner, Ridgway Ltd. of Newport Beach, pumped nearly $9 million into updating the structure a few years ago, but much of the money covered less splashy improvements, such as plumbing and landscaping.

The hotel was opened in 1962 by George Buccola and sold five years later to J.C. Jacobson, who operated the resort for just two years. Del E. Webb Corp., the Phoenix-based developer, later bought the hotel and eventually sold it to Ridgway. Westgroup took over ownership Feb. 28, 1985.

Lewis Payne, a 12-year bellman at the hotel, said that he had seen many changes under the last three owners. But this time, he said, the changes should result in improved business. “The others just came along and dabbled. If we don’t see improvements with $15 million, then we’d all better just quit.”