San Diego-based Bartell Hotels, which already owns a number of waterfront properties, now has another, the San Diego Airport Hilton on Harbor Island.
The company has purchased the 211-room hotel for $37.7 million and although it was recently renovated, Bartell plans on spending $5 million on additional upgrades over the next few years.
The acquisition brings to eight the number of hotels Bartell owns, including the Island Palms Hotel and Marina, and Humphrey’s Half Moon Inn & Suites on Shelter Island, Pacific Terrace Hotel in Pacific Beach and the Dana on Mission Bay. It also represents a turning point for the hotel company, which to date has focused more on expansion of existing properties as opposed to acquiring new holdings.
“We thought this was the perfect complement to our portfolio of waterfront hotels in San Diego,” said Bartell Hotels president Richard Bartell. “Over the years, we’ve maximized our ability to increase room inventory at our existing hotels, so future growth of the company will now depend on acquisitions.”
Selling the nine-story hotel was Square Mile Capital Management LLC, a real estate investment firm based in New York.
Although the Hilton, which was built in 1970, was only recently renovated, Bartell plans even more improvements. The recent work done by the seller covered the lobby, the guestrooms, and public areas, including the restaurant and lounge.
Bartell Hotels plans to do more work on the guestrooms, converting some tubs to showers, and adding more marble and granite in various parts of the property.
“The hotel is currently in excellent condition, we will just review other things we can do to enhance the guest experience,” Bartell added.
Bartell Hotels’ last acquisition was in 2005 when it jointly purchased the Kona Kai Resort on Shelter Island with Atlas Hotels and subsequently split the property. Bartell said its portion was incorporated into the Island Palms, which resulted in an additional 74 rooms. A few years later, it added 50 more rooms.
The San Diego Unified Port District is currently soliciting proposals from developers to redevelop the eastern end of Harbor Island, where one or more hotels is one possibility. Bartell, whose new property is on the western side of the peninsula, said that in the short term there would not be a demand for more hotel rooms there.
“Right now, there is a lot of new supply of hotel rooms coming on line in 2016 and 2017 but over the long term, the market could support additional hotel rooms on Harbor Island,” he said. “It’s a great destination and has close proximity to the airport and downtown.”