Motels, inns, hotels, bed and breakfasts selling at fast clip as hotel chains seek unique local properties

FORT BRAGG, 3/27/23 — On the Coast at least 20 motels, hotels, inns and bed and breakfasts have been sold since the start of the pandemic. This is an unprecedented pace in coast history, county recorder files reveal. Three of these were higher end inns, the others bed and breakfasts or economy motels.  Several top-tier Mendocino, Albion and Little River hotels also have sold, and more may be in the works. Two boutique chains have bought into the market for very high end hotels and inns. 

Why the sales? There has been a huge rush of money made during the pandemic by investors who are leery of the stock market. Several hotel chains have raised cash to buy single owner-founder motels and inns and consolidate staff and costs.  Many hotels that have been locally owned since they were created became terribly cash-strapped by the losses of the pandemic, combined with staff shortages and costs. Also, several of the owners said no local buyers, only chains, have made offers. And many of the owners are aging.

Hill House Inn and Mendocino Hotel in Mendocino were both sold to an investment group, Castle Peak Holdings, which will brand the two hotels Trailborn, said Jamie Buckner, general manager of both hotels. Both were once among the finest in Northern California but are in need of renovation. Hill House, once a grand hotel, became a budget motel as its staff shrunk and rooms lacked modern amenities. At least one other lodging chain has owned the two since they were locally founded and owned.

Buckner said both properties will be closed for renovation this winter, likely in December, and remain closed for an undetermined period, hopefully reopening before winter 2024 ends. Mendocino Hotel has been the heart of the downtown village for a century.

A hospitality chain called Soul Community Planet has purchased Stevenswood Lodge/Ravenswood, another longtime local operation, and renamed it SCP Mendocino Inn and Farm. SCP also purchased The Inn at Cobbler’s Walk across the street, both last year and made one operation out of the two Little River properties which are across Highway 1 from each other. Currently SCP is in escrow for another iconic Mendocino Coast inn south of the Village. Escrow is expected to complete next week, but such sales can collapse at the last minute. An interview with the owner confirmed the escrow was in process, and a story is planned if and when it becomes final. SCP is a project of founder-partner Ken Cruse.

Why are big companies buying local inns, motels and hotels?

Cruse, whose company is likely to soon own four high-end Mendocino Inns, told Hotel News Now magazine recently that the Mendocino Coast presents a prime opportunity to bring properties that have been developed into premium and unique sites by individual owners and put them into a chain to save money.

The company has expanded the scope of its portfolio, focusing on premium properties for travelers who are willing to go out of their way and spend more for experiences that fit with their core values, he said.

The company now pursues storied hotels in markets that have their own appeal and garner average daily rates of more than $300, Cruse told the magazine. The growth strategy includes acquiring hotels that are smaller or aren’t being operated efficiently as a one-off hotel, as well as building a bigger base in a market by combining multiple hotels into one. 

Cruse, who runs Alpha Wave Investors, is famous on Wall Street for his long resume in the hospitality industry. He recently told Hotel News Now that the Mendocino Coast has tremendous potential for travelers with a lot of money to spend.

Cruse told the magazine “Mendocino is a nature-focused, regenerative destination, and given how close the area is to the major gateway markets of Sacramento and the San Francisco Bay Area, it’s surprising how undiscovered it is. I think that’s about to change, or at least that’s part of our thesis,” he said.

He also mentioned the impending deal in the Albion area and said the company could save lots of money by consolidating three (four if you count Ravenswood and Stevenswood lodges combined before the purchase) into one operation with one staff.

“I would say in the case of Mendocino, we’ve certainly got a huge upside potential that we can manage very efficiently because we can do one general manager, one housekeeping team, one engineering team operating those two previously disparate operations, eliminating a lot of redundancy and overhead and operating costs,” he told the magazine.

SCP Hotels Poised To Take Advantage of ‘Window of Opportunity for Deals’

Cruse’s Alpha Wave Investors is blunt about its aims. A Google search for Alpha Wave finds this in all caps “WE EXIST TO ACHIEVE SUPERIOR INVESTOR RETURNS. PERIOD.” Alpha Wave is a limited partnership but its webpage shows it also buys hotels as well as apartment complexes and housing in places like Arizona, Oregon and Nevada.

What We Do — Alpha Wave Investors

Because Alpha Wave is a limited partnership it has limited public filings. Real estate ownership of private homes by investor groups like Alpha Wave and Castle Peak Holdings has been one of the fastest-growing sectors for those who want to invest but let someone else deal with issues that normally come with owning real estate. It’s also been very controversial on the Mendocino Coast (far more so than ownership of fine inns by corporations rather than local founders). The SCP chain is dedicated to social responsibility, with commitments to zero waste and locally sourced vegetarian food. They also practice something that made the fancy hotels of the Mendocino Coast famous and infamous back in the era after World War II —- no televisions, phones, clocks or radios in the rooms. These hotels boasted of their food and full service for guests but not technology. Many of the old hotels buckled to pressure in the 1980s and installed those amenities, but now SCP wants to go back to that philosophy in each of its properties. SCP offers its rooms as “peaceful”: without TVs, clocks or radios, but with modern twists, including a yoga mat, meditation pillow, sound machine, as well as a selection of essential oils and calming teas.

SCP Mendocino Inn and Farm

Castle Peak Holdings

The Blackberry Inn, a Mendocino Inn set up as an entire Hollywood Old West town set is now closed. It was designed by renown Little River architect Paul Tay and opened in 1980. A Petaluma couple is renovating it with hopes to open in June. In Fort Bragg, with motels on the opposite end of the scale from the ones being purchased by the boutique chains run by money funds, the same principle is true, according to hospitality magazines. Huge savings are expected in the economy motel market by eliminating the need for local managers and depending upon “economies of scale.”

Fort Bragg’s hotels show how different the experience is than that in Mendocino, Albion and Little River. Fort Bragg offers a wide range of economy motels from Best Western to Holiday Inn Express. There is also the unique mid0upscale motels and inns, which are much bigger and mostly less expensive than the inns of Mendocino. There is also a row of bed and breakfast inns on the north end of town. Most of Fort Bragg motels that have sold recently or are on the market have been open for business since most pandemic restrictions were lifted. One exception is The Pine Beach Inn, located south of the city limits, which has had a chain link fence around it for months. That hotel includes one of the few private beach accesses in all of California, with paid parking required by the previous owners and the access now cut off by fencing put around the motel. Longtime owners Raul and Rosa Monroy sold the property to the owners of Mendocino Grove, a camping company.

Another of Fort Bragg’s hospitality gems, the Emerald Dolphin Inn, a higher end hotel on Fort Bragg’s southern boundary, sold for $5.5 million, recorded in November 2022. Emerald Dolphin includes a miniature golf course and the new addition of a bounce house and kids’ play areas. Bed and Breakfasts have been selling fast also. One, the Country Inn, was sold to a local family for housing. Another, the Glass Beach Inn, was sold to the Skunk Train for workforce housing in 2022. The Skunk made significant improvements to the interior to make the habitable for the staff on a long-term basis. Renovations have been going on furiously all along Main Street. Prior to the pandemic, Fort Bragg’s hospitality community had been excited about a proposal to build The Avalon Hotel near the north end of Fort Bragg where The Beachcomber and Surf and Sand Lodge already present Fort Bragg’s only actual ocean front lodging, despite the names of several motels. The Avalon was in process of building out a 65 room motel which promised all local construction, numerous environmental and energy innovations and upscale rooms for business travelers. It was ready to go in 2020 but the pandemic derailed everything. No word on what’s next for that oceanfront lot at the end of Airport Blvd. The Harbor Lite Lodge does offer harbor frontage and spectacular harbor/ocean views.

Local real estate agents  believe the large number of sales came from the hit hotels and motels took during the pandemic, the advancing age of so many properties, and the large amount of investor cash in the market looking for a more reliable place to put their money than stocks, bonds and crypto. 

For more on coastal hotels, see our related recent story:

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