R&R Transforms Military Base Into Lodging Venue

MCCLELLAN, CA— Converting a single, historic property or what was once an office building or apartment complex can be a challenge from which some hotel companies would shy away. Which stands to reason that taking on the conversion of a military base would be an even more daunting task. However, when R&R Hotel Group was presented with the opportunity to convert a portion of the 3,000-acre McClellan Air Force Base in the Sacramento, CA area, the hotel company, which was formerly based in Los Angeles, jumped at the chance. “As a 20-year-old independent hotel management/ development company, we wanted to do something a little different,” Russell Dazzio, chairman, R&R Hotel Group, told HOTEL BUSINESS®. Indeed, R&R signed on three years ago to redevelop 18 acres of the base into a hospitality venue that is now known as Lions Gate. It is part of a master-planned development known as McClellan Business Park, which is a joint-venture development spearheaded by Stu Lichter, president of Industrial Real Estate Group (IREG), one of the nation’s largest real estate holders; prominent Sacramento businessman, Larry Kelley; Morgan Stanley Real Estate Investment Fund; and R&R Hotel Group, which acts as the hospitality division’s managing partner. The entire park took a total of five years to create, said Dazzio. Since its founding in 1987 by Dazzio and his partner Roland Moritz, R&R Hotel Group has renovated, repositioned or managed more than 50 full- and limited-service hotels. During the company’s tenure as manager of the historic Huntington Hotel and Cottages in Pasadena, CA, for example, the hotel underwent a $100 million redevelopment into a Ritz-Carlton property. The exposure earned from the Huntington hotel conversion, noted Dazzio, allowed R&R to enter into a series of successful assignments that spanned the globe, from Las Vegas to China. Lions Gate is the management company’s “crowning achievement” in Dazzio’s estimation. And it was R&R’s reputation as a hotel manager/developer and its experience in redeveloping/repositioning properties that gained the company answer the door when opportunity knocked. Looking for a change, it was chance meeting with IREG’s Lichter set up through a friend of R&R that brought the company into the fold. “A real estate broker friend of ours called with a project we could really sink our teeth into,” noted Dazzio. At first, Dazzio said, he wasn’t sure what to expect. The same friend had mentioned that there was an officers’ hotel, but upon meeting with Lichter, Dazzio saw that there was a lot more potential. The two companies, IREG and R&R, immediately recognized what could be brought to the table if they teamed up. “We definitely clicked,” said Dazzio. However, IREG wanted one important stipulation met: R&R had to purge itself of all other hotel commitments in order to get the opportunity not only to manage this unique hospitality complex they proposed, but also get managing partner status on the hospitality project, said Dazzio. “He put the deal on the table and asked us to come up with a plan,” said Dazzio. “He wanted us to devote ‘x’ amount of time to this project, and said he’ll make us a managing partner. But we had to give up everything else we were doing.” Dazzio said it was a sweet enough and unique enough deal to go ahead and take R&R out of all of its hotel commitments in order to get a chance at this deal. The last hurdle was presenting R&R’s ideas to the rest of the joint-venture partners. But it was one R&R leapt over quite easily. “We made our presentation, and they said, ‘Wow,’” noted Dazzio. That’s because R&R did not stop with just a hotel. Their plans called for a 118-room, upscale, independent boutique hotel; a meeting pavilion; conference center; private wedding chapel; a cafeteria seating up to 500 people; an upscale clubhouse carved from the old officers’ club; 18 extended-stay units; and 36 luxury suites carved from (cottages) from the old officers’ houses. And that’s