LONG BEACH, CALIF.-The eighth edition of the California Lodging Investment Conference kicked off last week with a specific message: Eight is lucky, especially when California hospitality initiatives taken in the past year reflect the willingness of owners and investors to take risks and make their own luck in advancing their business endeavors while keeping the industry in California strong.
CLIC’s “Hotel Development Deals of the Year,” presented after those opening night remarks showcased the achievements of two owners who made their own good luck in 2024 by following hospitality market trends and their intuition. Hotel owner Dipak Patel was recognized for developing a strategic dual brand strategy with the realization of Hometown Studios by Red Roof Ridgecrest in the “select service” category.
In the higher-end hotel and resort category, John Molina, founding partner of Long Beach-based investment and development group Pacific6, realized a personal lifelong dream of returning The Fairmont Breakers Hotel, a century-old historic landmark, to its former glory and contributing to Long Beach’s revitalization in the process.
To provide some economic context, Bruce Ford, senior vice president at Lodging Econometrics, presented CLIC attendees with the realities hoteliers will need to navigate 2025, with interest rates gradually coming down but rising costs keeping it expensive to finance new hotel construction. On the other hand, refinancing is available for hotels that are doing well with business and leisure tourism on the rebound. With properties needing upgrades, rebranding, or repositioning, owners and investors needs to have a clear vision on how to move forward.
“Across California, we saw some big ups in 2024, and we will continue to see them in 2025 as conferences and business travel have returned, particularly in Southern California,” said Ford. “We have the 2028 Los Angeles Olympics and the World Cup coming to several cities in 2026. With that, we are seeing many renovations and conversions. There were roughly 375,000 rooms that were renovated (in the past year), and several hotels were rebranded. While it is not a historical high, it is absolutely trending well above the average.”
The ‘20s Roar Again: The Fairmont Breakers Long Beach
Once upon a time south of Hollywood, The Breakers opened in 1926 and quickly became Southern California’s premier destination hotel with its exclusive boutiques, a Turkish bath, roof garden, elaborate dining rooms, and private beach entrance. It attracted A-listers of the day like Cary Grant, Rita Hayworth, and Clark Gable, and later became the first Hilton west of the Mississippi. For lifelong resident Molina, who passed the building en route to work over three decades, it was heartbreaking to see it “not serving its highest and best use.”
“Although I talked to the owner, who operated it as an assisted living facility, on several occasions, the price was always too high,” recalled Molina. “However, we eventually we were able to come to an agreement to allow us to start the process of bringing it back to luxury in late 2017.”
From there, Molina and his Pacific6 partners announced their intention to fully restore the property and operate it as The Breakers Hotel & Spa, a 185-room/22-suite luxury boutique hotel. In July 2022, the group announced the hotel would be managed by the luxury Fairmont Hotels and Resorts, leading it to be renamed The Fairmont Breakers Long Beach on its opening in November 2024. While the historic The Sky Room restaurant was also brought back to life, the hotel has plenty of new features including the only two-story spa, third-story pool, and rooftop lounge. He personally looks forward to summer, when sunrise yoga sessions will be offered on the roof.
In addition to the historic tax credits, Molina details the project came together thanks to Berkadia, a commercial real estate industry broker, and loans from Berkshire Hathaway and Jefferies Financial Group, CastleGreen Finance and X-Calibur Capital. The C-PACE (Commercial Property Assessed Clean Energy) loan provding 100 percent upfront capital to upgrade older buildings with energy efficiency, was the largest in the state of California.
“This is my fourth building that was renovated with the help of a historic tax credit,” Molina said. “It wasn’t just renovating, but also keeping the keeping the historic elements intact even as we modernized it. While we were able to get a loan and to finish the project, there was COVID-19 and a few delays along the way. It’s very exciting because adding a luxury hotel, benefits Long Beach tourism and will bring in larger, more upscale conventions and events.”
Dipak Patel: Raising the “Roof” on Select-Service Properties
According to Ford, Patel’s initiative on the The Red Roof and HomeTowne Studios deal represents a “welcomed reimagination of the property” and “a win/win for brand and ownership.”
As the owner the Ridgecrest, Calif. property, located within a mile of the Naval Air Weapons Station China Lake, Patel recognized that with the right hotel partner, he could create the perfect select-service/extended-stay property for clients who are either on active duty in the military or are defense or private sector contractors. As this clientele’s lodging is often covered by employers or others who require a longer stay along with per-diems for daily expenses, his concept provided a financially viable alternative to the day-to-day pricing of hotels as well as comfortable residential feel that adds a sense of well-being for the long-term guest.
“We've learned in recent years that to keep up with the market, you have to reinvent yourself, and you have to be able to capture the trends in your business model,” Patel affirmed. “There has been a boom in the extended stay segment (within the select-service category). As we wanted to capture that at our Ridgecrest property, we knew we had assets that could be repurposed in whole or part to the extended stay model. We realized that the amenities the property offered made it a perfect fit for a mid-scale dual brand. We've got a restaurant on-site that we're refitting that's going to open in the next couple of months as well as an adjacent to a restaurant right off site, which made the large space a good fit for these guests.”
Patel details that Vin Sharma, director of development/business development and profit optimization at Red Roof Inn, approached him after seeing the property and felt it would be a good fit for the new HomeTowne Studio brand with the asset’s size, location, and amenities perfectly tailored for that market. Patel says that having a dual brand with a brand new to the West Coast (Red Roof Inn is better-known in the East, Midwest, and Southeastern United States) would provide a unique advantage with customers coming in from other places.
“I am honored by this award, but I also give credit to my staff,” Patel said. “I predict this deal will show other owners that they have options they didn’t know existed thanks to dual branding. Having this product and capturing the synergy of both brands is going to do wonders (in our segment).”