Morphing the Resort at Pelican Hill to the Marriott brand is a win all the way around

By GARY SHERWIN

The big news that the fabled Resort at Pelican Hill will be run by Marriott as a St. Regis starting July 1 has been some of the buzziest news not only here in town but across the tourism industry. I received dozens of calls and inquiries from colleagues around the country asking about it.

While the change seems surprising to some, it really wasn’t to me, and here’s why.

The pandemic, which was convulsive to just about everyone, was especially disruptive to the tourism industry, which was ground zero for economic dislocation. No one escaped unscathed.

Click on photo for a larger image

Courtesy of Visit Newport Beach

Gary Sherwin

Because of that, the Irvine Company, which owns Pelican, as well as the former Fashion Island Hotel and Hotel Irvine, seriously reevaluated their business models in the hotel space. Fashion Island Hotel closed at the start of COVID as well as Hotel Irvine. Pelican Hill stayed open, but at slightly reduced capacity.

Internally, there was much discussion as to what to do with all three properties, and rumors were rampant, especially about Fashion Island Hotel and whether it would turn into condos or be sold. Of course, we now know that they did a deal with locally owned Eagle Four Partners, which purchased the building and reimagined it as the new Pendry Newport Beach that opened last September.

Hotel Irvine was sold to the Hyatt Corporation and, after a significant renovation, opened as the Hyatt Regency Irvine.

That left Pelican Hill, which is the jewel in Irvine Company Chairman Donald Bren’s crown. He spent years not only getting approvals to build the 504-acre luxury property but also actively selecting the materials and décor that ultimately made it an uber-luxurious destination resort.

While there were rumors of a sale, I never thought he would part with it since it was a particularly significant passion project for him. But that didn’t mean Bren would have to operate it.

After an extensive vetting process with several luxury hotel brands, the decision to work with Marriott seemed an obvious one. Marriott is the largest hotel operator in the world, with 31 different brands. They already operate three properties in town, including Lido House Hotel, Newport Beach Bayview and VEA Newport Beach, which is also owned by Eagle Four Partners.

More importantly, affiliating with Marriott connects the formerly independent Pelican with Bonvoy rewards. This program entitles you to free nights and other upgrades if you visit enough times a year at any Marriott hotel. This program has huge value for hotels as it incentivizes many people to stay at a property so they can rack up points. Meeting planners also often choose hotels based on reward programs, especially Bonvoy.

But here is what is most noteworthy about this deal: The Irvine Company made this arrangement with Marriott on the condition that it take care of its existing employees.

Often, when new management takes over, many employees are laid off, and staff is replaced with people of the operating company’s choosing. Not so in this case. What is most extraordinary is that the Irvine Company mandated that all employees be guaranteed a two-year deal at their existing salaries and benefits.

But what really sweetened the deal is that all existing Pelican employees are absorbed into the Marriott system as tenured staff. That means if you worked at Pelican for 10 years, you are now considered a 10-year Marriott employee. That’s huge since it entitles you to eventually get stock options and retirement perks like free hotel rooms for life. It’s a massive concession for Marriott and one you must applaud the Irvine Company for insisting upon. They really protected their team and showed loyalty in this process which could have easily gone the other way.

Click open story button to continue reading…

The only employee leaving Pelican is Managing Director Gerard Widder, a highly regarded hotel executive and a well-respected member of the business community. It’s common practice for a new hotel company to be able to choose its own general manager, who will likely come from within the Marriott family or, specifically, St. Regis. No one has yet been announced.

But don’t worry – Widder isn’t leaving Newport Beach. He is the new vice president and general manager of Fashion Island, another Irvine Company asset. Although you might think moving from a luxury resort to a shopping center might be a stretch, it is actually quite an inspired decision. Bringing a hospitality mindset to Fashion Island, especially as it amplifies its luxury retail opportunities, is exactly what it needs right now.

This also allows Widder to maintain his ties to the local business community and stay on boards like Visit Newport Beach and the Chamber of Commerce’s Commodores Club.

However, perhaps the most exciting development is that the Irvine Company will invest north of $100 million to refresh Pelican Hill over the next couple of years. While the iconic property won’t be completely redesigned, its rooms and common areas will be reimagined consistent with its Italian character. This will be the first major upgrade of the property since its opening in 2008.

Come next month, St. Regis will take over but don’t expect a ton of changes right away. Most of the effort right now is getting back-of-house systems set up, like accounting and other Marriott proprietary programs. Until the renovation is completed, which will comply with mandated St. Regis brand standards, there won’t be a new flag in front of the hotel.

In the short term, most guests won’t know there was a change in management unless they are Marriott savvy. This means that Pelican will be what they call “White Labeled,” which means it won’t be overtly branded a St. Regis until the renovations are completed, perhaps by mid-2026.

The Irvine Company now has the world’s largest hotel management company handling the operations and can hand off the day-to-day headaches that naturally come up with managing such a luxury asset. They also get a renowned global sales organization to support it and drive business, something that they were only able to touch with their in-house team. This supercharges all their efforts to bring the right kind of business at the right rate to the resort.

This is terrific news for Pelican, Newport Beach, Gerard Widder and Pelican’s employees. It’s a massively positive development with a huge upside for everyone involved.

As Newport Beach moves into the uber-luxury market as a destination, I can’t imagine a better outcome. It’s a fantastic next chapter for the city’s most famous Five Star property.

Gary Sherwin is President & CEO of Visit Newport Beach and Newport Beach & Company.


Slide

Send this to a friend