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Transforming the Jewel

Transforming the Jewel With posh restaurants and a luxurious spa, Pebble Beach has become more than just a renowned golf resort
Bruce Schoenfeld
From the Print Edition:
Greg Raymer, Sept/Oct 2004

In a cool spring night, the new prototype of a Pebble Beach family rolls up to the entranceway outside the venerable Lodge in a late-model SUV. If they own a set of golf clubs, they've left it at home.He works in the film business; she does interior design. They've driven up from Southern California with their two young daughters to celebrate his birthday. They'll visit the nearby aquarium in Monterey, get spa treatments and shop. She can't wait to sit on the terrace of the Lodge at Pebble Beach and gaze out at the spectacular view, to visit the Beach Club if the weather warms, maybe even take a tennis lesson. He's eager to eat at several of the resort's restaurants. And golf, the raison d'etre at Pebble Beach from the day it opened in 1919? Actually, he confides, nobody in the family has the slightest interest.

Going to a golf resort to eat, relax and pointedly not play golf may seem like a curious way to spend a vacation, but Pebble Beach is not just a golf resort anymore. The celebrity-studded ownership group has transformed it into the ultimate connoisseur's retreat since buying the property five years ago. And by broadening the Pebble Beach brand, the owners have created the possibility of future line extensions.

In the same way that Las Vegas managed to grow its appeal from gaming and floor shows to dining, shopping and sports, the Pebble Beach name, which traditionally revolved around golf, has become shorthand for good living. The Club XIX restaurant now offers 33 different bottlings of Opus One, a highly touted new chef, pre-Castro Cuban cigars and 150-year-old Cognac. The spa features huckleberry herbal body wraps and chai soy mud masks, and the Beach Club provides tennis lessons for guests.

"We have guests who have come to play golf at Pebble Beach, and that's their No. 1 reason, their No. 2 reason, their No. 3 reason for being here," says Bill Perocchi, the resort's chief executive officer, who arrived in 1999 after stints at General Electric and Doubletree Hotels knowing almost nothing about golf. "But now, we get other people who have come to experience the spa and the beauty of the area, and to eat at four or five of our restaurants. Twenty percent of our revenue now comes from the retail shops on the property. Two years ago, we didn't have a kids' store, for example. Now we do, and it's doing very well."

Instead of getting the man of the house to Pebble Beach for a long weekend, the whole household now comes for a week. "Your spouse can come, your kids can come, there's just a lot to do," says Tom Klein, who owns Rodney Strong Vineyards and is a minority shareholder in the resort. Klein comes to golf more often than ever because his wife can spend a day at the spa. Then they dine together. Golfers now account for about 75 percent of the resort's guests, according to Perocchi, down from probably 85 percent only a few years ago—but even golfers have to eat, and a growing number of them are enjoying the massages and spa treatments and drinking big-ticket wines. As a result, non-golf revenues and profits are both higher than what the courses are generating.

This wasn't just a case of "polishing the jewel," as the previous owners—Japan's Taiheiyo Club and Sumitomo Credit Service Co. Ltd.—liked to call Pebble Beach, but keeping pace with the market. Former baseball commissioner Peter Ueberroth, who made a fortune in the travel industry, and Dick Ferris, who helped found the Westin hotel chain before running United Airlines, are travel professionals, while Hollywood icon Clint Eastwood and golfer and businessman Arnold Palmer presumably get around enough to spot a trend. They know that what were once the spoils of staying at the poshest resorts—the spacious health clubs and showcase wine lists, the plush robes and high-thread-count sheets—are now de rigueur at every Park Hyatt, Ritz-Carlton and St. Regis. To stand out, Pebble Beach had to offer more.

At the same time, the golf landscape has changed in America, in quite literal fashion. With signature courses such as Bandon Dunes in Oregon and the TPC near Jacksonville, Florida, sprouting from sand and weeds, Pebble Beach can no longer count on its standing as a golf resort to sell its product. Too many other choices exist for the vacationer seeking a memorable golf experience—and world-class coddling the other 18 hours a day. Pebble Beach had to be more luxurious than the other golf destinations—and, from the other direction, offer better golf than the resorts it competes against for today's luxury consumers.

Beyond that, its elderly customer base was dying, replaced by the younger, newly moneyed golfers who wanted a hotel that played to their demographic. "What you used to see here," says Laird Small, the director of Pebble Beach's Golf Academy, "were men in their mid- to late-sixties, usually at the top of their game in business, or already retired. Today's player is more likely to be in his forties or fifties. He's better-traveled and more sophisticated."

In 1998, the old Cypress Room, perhaps the stuffiest place to eat a meal in North America, was ripped apart and replaced with the Stillwater Bar & Grill, all curves and colors, which wouldn't look out of place in one of Bill Kimpton's boutique hotels.

A year later, the investment group headed by Ueberroth, Eastwood, Palmer and Ferris bought the four golf courses, two hotels (the Lodge at Pebble Beach and the Inn at Spanish Bay) and scenic 17-Mile Drive for a cool $820 million. Since then, the shift in emphasis has accelerated. The 22,000-square-foot spa, with 20 treatment rooms, a Flotation Wrap suite, a beauty salon and multi-head showers, was completed in 2000. Casa Palmero, a secluded, 24-suite oasis-within-a-resort, was constructed out of a 1927 estate once used as the residence of Pebble Beach's general manager.

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