By Christine De La Cruz Friday, February 14th, 2014

A hotel development frenzy in Paso Robles could double the number of rooms in town over the next 10 years, a figure that already has seen twofold growth since 2000 as wineries flourish.

At the start of the 2000s, the city had 648 hotel rooms. Guests can now choose from 1,375 rooms, a 112 percent increase, and that number is on track to double again by 2024, according to City Manager Jim App. The latest proposed developments include two projects over 400,000 square feet each, an Oxford Suites and a Marriott Residence Inn, among others.

“There is significant expansion underway,” App told the Business Times. He added that a “variety of other hotel projects are sniffing around.”

The largest of the projects on tap is the 439,000-square-foot Entrada de Paso Robles on Highway 46 East, which includes a 280-room resort, 80 bungalows and an outdoor attraction called Discovery Gardens. Developer Ken Hunter Jr., who designed Paso’s Hunter Ranch Golf Course, is first moving forward with the gardens and then will tackle the resort. “The theory is if he builds the destination garden first, he’ll be more successful in getting investors for the resort,” App said. Construction on the resort probably will not begin for several years, he said, noting that the project is dependent on the market and financing.

Addressing water concerns, App said the garden’s plantings will be appropriate for the area and water will be recycled on site. An 18-hole golf course and driving range had previously been approved for the land, which would have required significantly more water than the current proposal, App said.

On a hillside facing Highway 46 West, the Paso Robles Gateway project includes three hotels with 392 rooms total, plus vineyards and 30 residences. The 438,000-square-foot property has to be annexed to the city from the county, a process that is expected to be considered by San Luis Obispo County’s Local Agency Formation Commission later this year.

The project also must undergo an environmental assessment, which will include identifying water sources. App said it is likely the project will have to buy additional water from Lake Nacimiento to meet its needs. “Those are major steps that take a significant amount of time. On an aggressive schedule, I’d say three years — more likely four or five,” App said in terms of when construction would begin.

Sue Harvey, president of the public benefit corporation North County Watch, is concerned about the Gateway project’s water use and effect on traffic. “I don’t know how this is dealt with in the proposal, but that intersection right there has always been a large problem for the city,” she said, speaking of where Highway 46 West meets Highway 101.

Two hotels that could be completed as early as 2015 are the 127-room Oxford Suites at 4th and Pine streets and the Marriott Residence Inn, which will offer 128 rooms on South Vine Street. The city is waiting for Oxford to submit building plans, which will take three to six months to review. Construction could begin later this year at the earliest, App said.

The Marriott is still going through the application process, but the city doesn’t anticipate any problems. “They’ll likely be on a development plan not unlike the Oxford Suites,” App said.
Robert Hall Winery and Vina Robles are looking to open up two boutique hotels with 80 to 100 rooms each on the east side of town, a project that also will require annexation. And the Ayres Resort & Spa on Buena Vista Drive, which is currently under construction, has received approval to bump up the number of rooms from 175 to 225.

Wine industry boom

The Paso Robles wine industry appears to be the driving force behind the hotel boom. Paso Robles was named Wine Region of the Year in 2013 by Wine Enthusiast magazine, an international distinction that App said is attracting more visitors to the area. He said recognition in other publications, such as the Zagat restaurant guide, also has put the community on the map as a destination for food and wine. The annual California Mid-State Fair and the new Vina Robles Amphitheatre are also creating a need.

“The activities and events that are going on in Paso are creating the demand for rooms,” said associate city planner Darren Nash.

App said the wine industry boon is paying off in two ways because first-time tourists often come back and start investing, whether it be buying a vacation home or relocating their business to the area. “There is both a short- and long-term economic strategy to promoting tourism.”

He cited IQMS, a global software company based in Paso Robles, as an example. “That business could be anywhere, but they’re here because they like it here.”

Small-town allure

There is concern that as Paso expands, the city could lose some of the charm that has enticed return visitors in the past. “Paso Robles seems to be putting a lot of store in what the hotels are going to return to them,” Harvey said.

App said the hotel activity is provided for through the city’s general plan, which addresses issues such as water, sewage and infrastructure. “These smaller properties can fit in without dominating an area or neighborhood,” App said, adding that the goal is to ensure Paso “always remains a small town at its heart.”

Bruce Baltin, a senior vice president at PKF Consulting USA, which serves the hospital industry, said Paso Robles seems capable of handling the incoming hotel inventory.

The area is seeing more leisure travelers, he said, and resort-style hotels are needed to serve those guests. Although there is a breaking point for any city when it comes to expansion, he said Paso is not there yet. “It’s got the attributes to be a strong tourism destination, which is why these hotels are getting developed,” Baltin told the Business Times.

App is convinced that Paso can grow as a tourist spot without sacrificing its down-to-earth allure — an attribute that has given the local wine region a leg up on Napa and Sonoma, according to Sunset magazine wine editor Sara Schneider.

“If you go to the culture of the community here, they don’t want to be like Napa,” App said. “They want to be themselves.”