Hotel del Coronado in San Diego is becoming a Hilton

The storied Hotel del Coronado in San Diego will soon become a Hilton-run hotel, joining the huge hospitality company’s smaller Curio Collection of more unique, upscale properties around the world.

But don’t expect to see a large Hilton marquee suddenly adorn the facade of the 129-year-old, red-roofed Victorian building. Hilton’s physical presence will be understated, but its marketing muscle and its 64 million loyalty-program members will significantly broaden the reach of a property that already is widely known.

The 757-room oceanfront resort, which includes separate tower rooms and luxury cottages and villas, is expected to formally become a part of the Curio inventory by the end of this month. Curio is a newer brand that Hilton debuted three years ago. It currently includes 39 four- and five-star hotels, with several more in the pipeline. Three are in California: the Hotel La Jolla in San Diego, the Miramonte Indian Wells Resort & Spa near Palm Springs and the Juniper Hotel Cupertino in Silicon Valley.

Others include the Boulders Resort in Arizona, the Darcy in Washington, and the Renwick in New York.

The Blackstone Group will remain owner of the Hotel del Coronado but will rely on Hilton to manage it. Hilton will be replacing KSL Resorts, which has managed the hotel since 2003 and at one time had an ownership stake in the property.

“It’s been truly an independent hotel and we’re not looking to change it in any way,” said Mark Nogal, global head of Curio for Hilton Worldwide. “What we’re doing is coming in as an operator to help strengthen the performance of the hotel, and the owners get the buying power behind the Hilton organization.”

The changeover comes about eight months after a planned sale of the hotel by Blackstone to China’s Anbang Insurance Co. was scuttled.

The Hotel del Coronado was one of 16 luxury properties that were part of Strategic Hotels & Resorts, which Blackstone was planning to sell to the Beijing-based firm. Although 15 of the 16 properties were ultimately sold, the Hotel del Coronado was pulled from the portfolio after a Treasury Department committee was said to have had concerns about its proximity to the Coronado Naval Base.

Longtime broker and hotel analyst Alan Reay of Orange County-based Atlas Hospitality Group said the Hotel del Coronado’s alliance with Hilton makes sense for a number of reasons, including Blackstone’s relationship with Hilton, which it bought in 2007. (Blackstone has since pared its stake in Hilton to 10%.)

Normally, a hotel’s affiliation with a name brand such as a Hilton or Marriott can help raise the profile of a property, although that’s less a benefit for the Hotel del Coronado, long known for its connections to major films and such Hollywood luminaries as Marilyn Monroe and Jack Lemmon, Reay said. But there are still other benefits.

“We’ve moved to a lot of online travel agents like Expedia and TripAdvisor, and as an independent hotel, you have no bargaining power with those online travel agents,” Reay said. “With Curio, there could be a significant savings on those commissions that could help pay for the fees to be part of the Hilton system.”

He also mentioned that the hotel would plug into Hilton’s reservations system and could tap the members who use the Hilton Honors loyalty program.

Blackstone said that it was drawn to Hilton because of its record in operating hotels, and that the Curio Collection — which maintains its hotels’ independent feel — was a good fit.

Matt Anderson, Blackstone’s senior vice president for global affairs, was unable to disclose what improvements may be coming to the hotel as a result of Hilton’s involvement, saying only that “we are evaluating making additional investments in the property.”

According to Hilton’s Nogal, the ownership spent more than $11 million last year on improvements, and $15 million already has been invested this year on such renovations as new carpeting and paint in hotel corridors, new furnishings and upgraded lighting.

Built in 1888, the Hotel Del Coronado has had multiple owners over the years, including sugar magnate John Spreckels during much of the first half of the 20th century and M. Larry Lawrence, who was responsible for a sizable expansion of the hotel rooms.

In 2011, Blackstone rescued the hotel from a potential default on more than $600 million in loans when it invested cash to reduce the hotel’s debt and became a majority owner.

Weisberg is a writer for the San Diego Union-Tribune.

lori.weisberg@sduniontribune.com