Despite Recession, California Resort Thrives

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The luxury hotel market around the country is hurting: several are on the block; others have slashed prices or made package offers that they ordinarily wouldn't. But in Southern California, one place refuses to cut prices. The rooms start at $700, and the occupancy rate is enviable.

MELISSA BLOCK, host:

And the Hollywood set has a new luxury resort to slip off to, whether they need a soak in fig-scented waters or golf by the sea. While most hotels are offering discounts and perks because of the recession, this resort is charging top dollar.

And as NPR's Karen Grigsby Bates tells us, business is booming.

KAREN GRIGSBY BATES: There's luxury, and then there's luxury. About an hour south of Los Angeles, The Resort at Pelican Hill, perched high above a cliff on the coast of Newport Beach is so luxurious it almost exists in a separate reality.

Unidentified Woman #1: Yes, hello.

BATES: The concierge, for instance, will run a slide show on a flat screen so you can plan your waterfront recreation.

Unidentified Woman #1: I'm showing you one of the beaches. So you'll be able to see that, as well.

BATES: Pelican Hill has nine kitchens, one with an Italian chef who oversees pastas made fresh by hand daily. There's an authentic gelato bar with a dozen offerings.

Unidentified Woman #2: The flavors actually change daily, sometimes as well with whatever is seasonal.

BATES: And a floor-to-ceiling wine cellar stocked mainly with fine wines from Italy, in keeping with the resort's Italian ambience. If food and drink aren't your weakness, how about two world class golf courses with ocean views, created by master designer Tom Fazio. Or one of the world's biggest saltwater pools, a perfect circle set at a comfortable 84 degrees. My tour guide, Landry Fuller(ph), took me to see for myself.

This feels great.

(Soundbite of laughter)

Ms. LANDRY FULLER (The Resort at Pelican Hill): Did you bring a suit?

BATES: I did not.

Go behind the wood doors of the Roman spa, and you'll find a whispering water wall and treatments keyed to the season using local organic ingredients. Fall is figs.

Ms. FULLER: The technician actually peels the fig ingredients into the scrub.

BATES: All this customized attention comes at a price, of course. Rooms at Pelican Hill start around $700 and go to the thousands. And most of them are filled, even though the resort opened one year ago, just a month after the economy tanked.

How smart was it to open a place like this at a time like this? Pelican Hill's president Ralph Grippo says he's taking the long view.

Mr. RALPH GRIPPO (President, The Resort at Pelican Hill): We built this for 100 years. We didn't build it for a good economy or a bad economy. Cycles will come and go.

BATES: The resort is also conveniently near a significant population that has money and is willing to spend it, especially if it doesn't have to travel far to do it, people like Bonnie Tiegel, a senior producer for the television program, "Entertainment Tonight."

Ms. BONNIE TIEGEL (Senior Producer, "Entertainment Tonight"): It's not even a tank of gas. So, if you really weigh things on what you're spending by spending a weekend there or three days there, as opposed to flying off to Hawaii for, you know, a four-day quick trip, you're better off going to Pelican Hill.

BATES: Grippo says that's exactly why the resort was built.

Mr. GRIPPO: Our core demographic is the drive market, primarily from Southern California, but anywhere from Las Vegas, Palm Springs, two to three-hour drive radius, where you don't have to get on a plane and you can just show up at any given time.

BATES: But catering to the well-heeled isn't an automatic recipe for success. Many luxury properties in California and across the country are flailing; some are in foreclosure. What makes Pelican Hill different is the fact that it's owned by the Irvine Company, one of Southern California's oldest, wealthiest real estate developers. The land the resort sits on has been paid for for decades. Luxury property analyst Jerry Morrison says that gives this resort a cushion few others have.

Mr. JERRY MORRISON (Luxury Properly Analyst): Whatever debt is on the hotel is probably de minimus. And even if it isn't, the Irvine Company is fully able to handle whatever debt service is necessary.

BATES: No debt doesn't mean the resort isn't spending buckets of money, though. They won't say how much, but here's one indication: Pelican Hill's owner sent a team of artisans, designers and architects to Italy for a year just to make sure the Italian flavor here is authentic.

Some guests do come from abroad, but about 70 percent are people from nearby. They're easily able to pay the significant price, Grippo says, but they want their luxury minus the attitude.

Mr. GRIPPO: It's not built to be stuffy and arrogant. It's built to be a very special, elegant, casual place.

BATES: In an era when the hospitality industry's profit margins are getting thinner, Pelican Hill has managed to encourage guests like Bonnie Tiegel to pay top rates for a getaway that's quick and doesn't require a plane ride.

Ms. TIEGEL: Because of the business that I'm in and the insanity of how it is every day and pretty much every night, to be able to get away and feel really removed from everything, if you want to be, is an incredible luxury for me.

BATES: A nice thing for those who can afford it.

Karen Grigsby Bates, NPR News.

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