Jun. 21, 2003 - Orange County's luxury hotel market got a little more crowded Friday as the Irvine Co. announced it will build a resort at the edge of Pelican Hill Golf Club in Newport Coast. 

The 204-room luxury hotel, called the Pelican Hill Inn, will anchor the fifth upscale resort on the Orange County coast to be built since 2001. Just this year, three new resorts have opened, joining six others that stretch from Huntington Beach to Dana Point. Located near Crystal Cove State Beach and overlooking the Pacific Ocean, Pelican Hill will sit between two of the newest resorts -- the Montage in Laguna Beach and the Balboa Bay Club & Resort in Newport Beach. Construction could begin by late next year with a projected opening date of 2006. 

"This reinforces the Orange County coast as a visitor destination," said Eric Prevette, president of Resort Properties at the Irvine Co. "It fits really nicely into that concept." At the same time, Prevette says Pelican Hill will be able to distinguish itself enough to be a vigorous competitor in the market. Designed to be a quiet getaway, it will include the hotel, a 19,000-square-foot spa, a world-class restaurant and 120 shared-ownership vacation homes that will be sold for fixed periods of time, possibly one to three months. 

Each room and vacation home will have an ocean view. 

"We believe it will be unique among the new resorts," Prevette said. "What we envisioned was a small, intimate property with more of a residential feel to it than some others on the coast." 

Prevette joined the Irvine Co. two years ago after a long career in the hotel industry, including a stint with Rosewood Hotels. Rosewood acquired the Hotel Bel Air in Beverly Hills, one of the luxury properties that inspired the one-story, casually elegant concept for the Pelican Hill resort. 

"We looked at a lot of hotels all over the world, from San Diego to Italy and France, and this one has all the elements you look for in a resort," Prevette said. "It has the golf and shopping, easy access with the airport nearby, the Mediterranean climate, the market and the employee base." 

By joining other resorts already in the market, Pelican Hill will benefit from what is called the clustering effect. Having competing establishments in one area -- whether hotels, restaurants or shops -- solidifies an area as a destination. 

Officials at the Montage and the St. Regis Monarch Beach Resort & Spa confirm that's happening. The most recent report from PKF Consulting shows the luxury segment has been the strongest part of the market in Orange County since January, both in room rates ($198) and occupancy rates (71 percent). "If this was an established resort area and other (resorts) moved in, it could hurt," said Jim Kelley, marketing director at the St. Regis. "But there's still room for growth. By 2006 (when Pelican Hill is set to open), things should be really booming." 

Alan Fuerstman, owner of the Montage, faced some of the same questions about timing in the luxury market when the Laguna Beach resort opened in February. 

"Yes, there is uncertainty in the global markets and the economy, but you probably can't find a stronger regional destination," Fuerstman said. "Couple that with the tremendous success we've had since we've opened, and I'm still very high on the future of this marketplace." 

The Irvine Co. could operate the inn, or it might partner with a luxury hotel brand that isn't already in the market, such as Fairmont or LeMeridien. That will be decided as the project develops, said Rob Elliott, vice president for urban planning and design. 

The resort development is part of The Irvine Co.'s 40-year master plan, which is governed by the Local Coastal Program and was approved in 1988 by the California Coastal Commission. 

Pelican Hill Golf Club, now 12 years old, will remain open throughout construction. The existing golf clubhouse will be incorporated into the inn, and a new clubhouse will be built at the driving range. A stone bridge, with the look of an old-world aqueduct, will connect the driving range to the first tee. 

Officials at the Irvine Co. said they don't anticipate opposition to the project. Meetings are scheduled next month to explain the project to nearby residents and other interested parties. 

The company gave no estimates on cost of the project, still more than a year away, but experts said it could easily be $50 million for the hotel alone. The Montage, a 262- room hotel with a residential component, was estimated to be a $200 million project. 

The residential portion of the resort, which includes two-bedroom and three-bedroom units, is part of a trend in luxury resorts. It brings in revenue up front and makes it easier to finance the project. 

In many markets, developers would find it difficult to finance a luxury resort today given the long slump in tourism across the country and the economic uncertainties, said Harry Pflueger of Maxim Hotel Brokerage in Newport Beach, which specializes in hotels, resorts and casinos. 

"The sponsor has to be a very strong company, or it won't get built today," Pflueger said. "With this being the Irvine Company, and the Pelican Hill location with world-renown golf and the ocean right there, I don't think they could really go wrong with it. 

"Right now, most people think we're in the trough of the market. By the time they get through construction and open it, we'll probably be at a much stronger point in the cycle." 

PELICAN HILL RESORT 

--What: 204-room Pelican Hill Inn and 120 multiple-ownership units. 

--Where: Edge of Pelican Hill Golf Club in Newport Coast. 

--Who: The Irvine Co. will build it and could hire a luxury hotel brand to operate it. 

--When: Could break ground late next year with projected completion by 2006. Residence club to be built in phases over several years. 

--How: Existing Pelican Hill golf clubhouse becomes part of the new inn and events center; new clubhouse will be built near the driving range. 

--How much: Room rates expected to be competitive with nearby resorts, in the $375-$475 range. 

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(c) 2003, The Orange County Register, Calif. Distributed by Knight Ridder/Tribune Business News.