Construction of hotels hot on the coast: Two redevelopment proposals in Half Moon Bay could increase occupancy by 25 percent

Restaurateur Cameron Palmer is just months away from completing construction on a new 46-room Best Western next to his British-themed pub and 8-acre RV lot campground on Highway 1.

A stone’s throw away on the east side of the highway, there’s a proposal to construct a 147-room Hyatt House; which came before the Planning Commission for a preliminary review last week. Greg Jamison, whose family owns the James Ford dealership, is looking to redevelop a neighboring vacant 5-acre parcel. He’s proposed a hotel with conference space and a small tourism-centered facility at the triangle-shaped lot just south of Main Street and Higgins Canyon Road.

Currently, the coastside offers about 748 rooms spread amongst 22 hotels between the southern border of Pacifica all the way south to Pescadero. With thousands cruising to the coast year-round, existing hotel inventory averages 72 percent occupancy, said Charise Hale McHugh, CEO of the Half Moon Bay Coastside Chamber of Commerce. On weekends, an influx of visitors tips that to about 95 percent occupancy, she said.

“We have a little bit of everything that Northern California has to offer. We have redwoods, the ocean, a quaint Main Street, galleries, a couple of wineries and we’re within 45 minutes of anywhere within the Bay Area,” McHugh said.

The city’s 12 percent transient occupancy tax is a huge economic driver as well. It accounts for Half Moon Bay’s largest tax base and is expected to generate nearly $5.9 million, or almost half of its total general fund tax revenue this fiscal year, according to the city.

“We’re a tourism-based economy. We used to be agriculture and fishing; but our income base is now tourism,” McHugh said.

Palmer and Jamison said they’ve long thought about redeveloping their properties, but felt now was the time to pull the trigger and aim for tourism.

“The economy is doing well,” said Palmer, who’s been in the coastside restaurant industry for 35 years. “We used to be a place you drive through to get to somewhere else, drive through to get to Santa Cruz or San Francisco. But we’re now the destination. We’ve got beautiful beaches, scenic beauty, the redwoods, two golf courses. We’re now the destination. And with that, I’ve just seen a real increase in tourism. … We just don’t have enough room out here. There’s many weekends when the coastside is 100 percent sold out.”

Where visitors could stay

Palmer and a financial partner are in the midst of constructing a two-story Best Western-brand hotel immediately adjacent to Cameron’s Pub. One of the landmark red double-decker British buses that sat in the rear of the property was relocated to make room for the new structure on his 2-acre property.

Another 8 acres immediately adjacent to the site host a revamped RV park he finalized just a few years ago. Palmer expects the new hotel — that will mix beach-themed rooms with a hint of British style — to welcome guests in March 2017.

Across the highway, Jamison is beginning the environmental review phase for his proposed 147- or 148-room Hyatt-brand hotel. The proposal includes 3,380 square feet of conference space, of which there is limited inventory on the coast, as well as a 2,700-square-foot retail building he plans to open to the public. His vision for the northern portion of the parcel is a community gathering spot with bike rentals, coffee bar, restrooms and a place where visitors can find information about local shops, restaurants and environmental nonprofits, Jamison said.

“We’ve been on the coast here since 1985,” Jamison said, noting at one point they thought about redeveloping the car dealership before settling on a hotel as the best use for the site. “This would be a good addition for this end of town. … We want it to look nice, it’s kind of the gateway into the city.”

Jamison noted the Hyatt House would not only have aesthetic appeal and about an acre of open space, it could also generate nearly $1 million in annual hotel tax revenue for the city.

But building within the coastal zone requires a slew of permits and potentially approval from the Planning Commission, City County and perhaps even the California Coastal Commission, said John Doughty, Half Moon Bay’s community development director.

The proposed three-story building sits atop a parcel zoned as a planned unit development and must meet certain requirements as well as comply with the city’s local coastal plan, Doughty said.

Traffic in the area is also a known headache on busy weekends, particularly along northbound Highway 1 leading into town toward State Route 92. The city is in the midst of considering various congestion and safety-related improvements nearby.

Doughty said he’s not surprised by the hotel proposals, particularly as a jaunt over the hill and along Highway 101 highlights numerous new facilities as well as remodels geared toward travelers. Emerged from the recession, developers may be playing catchup and the coast isn’t exempt from pent-up demand, he said.

“During the recession, no one was financing hotel development, there was this extremely huge latent demand for new rooms,” Doughty said. “I think you’ve got two factors playing out in Half Moon Bay. Obviously you’ve got a tourist destination, but it also happens to be 10 miles from the center of the universe in terms of the economic engine going on in Silicon Valley.”

samantha@smdailyjournal.com

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