Jan. 7, 2006 - The landmark fountain survived, but just about everything else at the Newport Beach Marriott Hotel got tossed, moved or overhauled in the past 18 months as part of a makeover that transformed the hotel and repositioned it as a competitor in Orange County's upscale lodging market.

Marriott's $67.5 million investment is the biggest renovation in the county and part of a remodeling trend that has touched more than half a dozen other hotels.

At the 30-year-old Marriott, walls were torn out, modern heating and air-conditioning systems were installed, and more than 300 rooms were closed. Finishing touches will be added over the next month, but the hotel reopened its lobby this week along with the soft opening of its new restaurant, Sam & Harry's.

The long, messy and expensive process should be worth the aggravation, says Bill Gunderson, the hotel's general manager. Marriott International operates the hotel, the 11th Marriott built, and Host Hotels and Resorts owns the property.

"The two companies have never taken on something of this complexity," Gunderson said. "It's unheard of to do 532 rooms and $67.5 million. But the location dictated we wanted to be here for the long term." The Marriott, in Fashion Island, is minutes from John Wayne Airport and the beach. Most rooms in its towers have views of the Pacific.

At today's general-construction prices, $67.5 million could build a new, full-service, 325-room hotel -- if you could find the land to put it on.

But land is scarce and construction costs are soaring, factors that hinder hotel building. Lodging-industry profitability is on the rise, however, giving investors the confidence to renovate and buy hotels, especially in this market.

"Newport Beach did not have the hotel products that went along with this address for many years," Gunderson said, "and now that's changed." The Balboa Bay Club opened a public hotel on the waterfront in 2003, the Hyatt Regency Newport Beach just completed a $12 million renovation and the Fairmont -- formerly Sutton Place -- is getting a $22 million makeover.

Nearby, the Irvine Marriott finished a $9.5 million renovation and the Ritz Carlton Laguna Niguel spent $40 million on major upgrades. In Garden Grove, the Hyatt Regency Orange County invested $52 million in a remodel.

"The big trend in the industry for 2006 and '07 is the massive amount of renovation that's going on," said Alan Reay, head of Atlas Hospitality in Irvine, a hotel real estate firm. "The cost to produce a full-service hotel is prohibitive, unless you have the condo-hotel component." Marriott, which books 40 percent of its rooms with business travelers, opted not to create a condo-hotel. Instead, it plans to sell four acres of property to Lennar Homes for the development of 79 low-rise condominiums.

The condos will be on the site of the Marriott tennis courts, and a partnership will allow owners to use Marriott facilities, Gunderson said.

The lodging industry continues to recover from a slump after the Sept. 11 attacks. The growth in occupancy rates and room prices led to an 11.4 percent increase in profits in 2004 -- a trend that is expected to continue at least into 2006, reports PKF Consulting, a hospitality research firm.

Orange County's increasing appeal as a vacation destination has filled more hotel rooms, at higher prices. Through the first 11 months of 2005, occupancy jumped 5.8 percent, to 72 percent, PFK reports. Visitors paid an average of $123.11 per room -- nearly $8 more than a year ago.

Newport Beach scored the biggest jump in room prices. The average room rented for $160.10, a $19.30 increase since January 2005.

Some observers called it gutsy for the Newport Beach Marriott to stay open during the renovation. The Sheraton Park Hotel in Anaheim took the other route, closing the 490-room hotel to manage a $32 million renovation.

But the Marriott found creative ways to serve the visitors who continued to book rooms, despite repeated warnings that hammers would begin pounding at 7 a.m. and the restaurant would be closed.

Marriott contracted with "Restaurants on the Run" to provide room service and it served a full, complimentary breakfast in a conference room, said Rhanda Richardson, director of sales and marketing.

The Newport Beach Marriott opened in 1975, nine years before the Ritz Carlton pushed open the luxury door on Orange County's coastline. The Marriott got its first big makeover in 1986, and construction crews worked with the remnants of that project as they updated the hotel's main tower, built a new restaurant and added the Pure Blu spa.

The fountain, a hallmark featured in thousands of weddings, held onto its spot in the atrium lounge. It's now more visible from the lobby, where visitors can get a fresh view of the golf course and a glimpse of the ocean.

"When they built this hotel in 1975, most people thought of Orange County as a white spot between L.A. and San Diego," said Bob Shorb Jr., a Host Marriott executive who worked on the renovation. "Now it has its own gravitational pull."

HOTEL MAKEOVER: The Newport Beach Marriott is wrapping up an 18-month renovation. Here are some of the details of what's new:

--Rooms: 532, with 20 suites -- down from 586 rooms and up from 8 suites

--Spa: Pure Blu, 14,000 square feet with salt lap-pool and full service salon

--Restaurants: Sam & Harry's, Sushi Bar Lobby Lounge

--Meeting space: 41,000 square feet, indoor and outdoor

--Room decor: Nautical theme, featuring Marriott's luxury bedding Rates: $169-$369.

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