Hospitality Startup Pays $80M for Laguna Beach Hotel

Dune Drifter, a new hospitality firm with ties to the Marriott family, has bought the Pacific Edge Hotel in Laguna Beach for $80 million.

The Century City-based firm led by Cramer Williams bought the 125-room, beachfront hotel at 647 South Coast Highway, the Orange County Business Journal reported.

The seller of the Mid-Century hotel was Highgate Hotels and Morgan Stanley, both based in New York.

Broker Patrick Deming of Eastdil Secured held the listing.The deal works out to $640,000 per room — the highest price paid for a hotel this year in California.

Highgate and Morgan Stanley bought the three-story hotel in 2017 for $57.5 million, or $460,000 per room. A year later, they filed plans to renovate the 61-year-old hotel.

Approved plans by the City of Laguna Beach and the California Coastal Commission call for adding 25 more rooms, a 60-seat cafe, office and conference areas and a porte cochère entrance, in addition to unified architectural facades. The pool and spa would be relocated.

Highgate proposed to make six rooms affordable at $130 per night along with payment of a mitigation fee.

The new owners aim to carry out the hotel makeover, unidentified sources told the Business Journal. The cost could be more than $125 million. A construction timeline was not disclosed.

The 44,700-square-foot Pacific Edge Hotel, built in 1963 and owned for four decades by the Haneline family, was once known as Vacation Village Hotel. It has 4,000 square feet of meeting rooms and two restaurants, The Deck and Driftwood Kitchen.

Its 11 buildings stretch from the Pacific Coast Highway across Sleepy Hollow Lane to the beach. Rooms rent for between $246 to $759 a night, according to the Business Journal

The biggest hotel deal in OC was the 2022 purchase by Tilman Fertitta of the 260-room Montage Laguna Beach for $650 million, or $2.5 million per key. Rooms at the Montage fetch up to $1,800 per night.

Dune Drifter, founded in April, is led by Williams, a Wall Street veteran who founded Dauntless Capital Partners, based in Houston. Dune was co-founded by Dauntless Managing Partner Chris Harrison, grandson of Bill Marriott, the billionaire executive chairman of Marriott International.

— Dana Bartholomew