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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
By Bruce Schoenfeld | From Greg Raymer, Sept/Oct 2004
Transforming the Jewel

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.

Every room in the Inn and the Lodge was renovated earlier this year, at the cost of $15 million. Furnishings that used to look like your grandmother's apartment have been replaced by decor you'd be proud to own yourself. Even the custom-designed soap in the rooms is a mission statement. "We spent a lot of time arguing about the right scent," says Janine Chicourrat, the manager of the Lodge. "It had to be manly enough to appeal to our traditional clientele, but also feminine enough to appeal to women."

Like any resort with character, Pebble Beach is an extension of its owners. At a corner table of Club XIX on a quiet Monday night, Ueberroth, Eastwood, Ferris and Perocchi, four of the resort's seven board members, talk quietly over dinner and a modestly priced Gary Farrell Pinot Noir. Along with the absent Palmer, they represent the most iconically American group of business investors who ever have combined on one project. Consider that Palmer is one of the best-loved American athletes, the first golfer to attract a mass following. Ueberroth was not only the guardian of the national pastime as baseball commissioner, but also produced the unrelentingly patriotic 1984 Summer Olympics in Los Angeles. Eastwood is this generation's John Wayne. When they reclaimed Pebble Beach after a decade of Japanese ownership, Americans cheered.

Beyond that, all four of the celebrity owners were Pebble Beach regulars who had been coming to the property for years before they purchased it. They understood the balancing act that would be necessary to maintain its tradition and history and to attract today's customers. "When you have a property like Pebble Beach, you need to be very cautious," says Ueberroth. "Bill Perocchi has brought together a group of leaders that can both respect the past and improve the property for the future. Doing that is an art form."

Club XIX is a case in point. It was set for demolition until a bright, young manager named Ed Swartz was hired from a Mississippi casino in early 2003. Swartz asked for three months to prove himself with the old concept. A year later, revenues in the room are up 40 percent. "And profits," Perocchi says with a Cheshire-cat smile, "are up 200 percent."

That pays for a lot of sand traps.

Swartz's Pebble Beach is an epicurean's delight where the rarest, most exalted—and expensive—treats can be found. His wine list is replete with old Bordeaux. Kobe beef, flown in from Japan, is served with a mélange of 19 vegetables. Krug Champagne flows freely. And Swartz has added profit centers such as a $1,200-a-pour 1937 The Macallan single-malt Scotch, a $525-a-pour Hardy's Perfection Cognac that dates to 1850, and a cigar list that includes Gurkha His Majesty's Reserve at $450.

It seemed like a gamble at the time, but now he can hardly keep the rarities in stock. Only Las Vegas's Bellagio sells more Hardy's Cognac than Swartz, and the comparison is apt. Pebble Beach now celebrates the spirit of glorious excess almost as well as the Vegas casinos, but with golf taking the place of gaming. Once upon a time, this publicly accessible resort had more rules and regulations, stated and unstated, than most private country clubs. Today, it is governed by an attitude of personal accommodation. "If they want a Caesar salad," Swartz says, "we give them a Caesar salad. Whether it's on the menu or not."

At the Inn at Spanish Bay up 17-Mile Drive, Roy Yamaguchi's fusion cuisine hardly calls out for a 1970 Pichon-Lalande, a 1998 Domaine de la Romanee Conti Richebourg or some of the other gems on the wine list. But that hardly matters. In the same spirit as the Vegas high rollers, guests come to Pebble Beach with money to spend and only a few days to spend it. They want a terrific bottle of wine with dinner, no matter what dinner happens to be.

During this year's AT&T golf tournament, food and beverage manager Roberto Arjona put together a private meal for 14 guests at Casa Palmero that included 1982 Château Margaux, 1966 and 1970 Château Lafite, six more bottles of first-growth Bordeaux—and a stack of $13 hamburgers from the Tap Room bar. "These people know exactly what they want, and they can afford it, whatever it costs," Arjona says. "If they feel like having hamburger with a fine French wine, they do it."

One guest called Arjona aside during the meal service. "Forget all these fancy wines," he whispered. "Bring me a Budweiser."

The spirit of accommodation pays off. Last year, a husband and wife from New York visited the Club XIX patio for four consecutive evenings after dinner. They smoked Gurkhas or 1955 Montecristos at $270 a stick, drank $525 Cognac and spent "at least $1,250 a night," according to Swartz. On the final night, the husband bought 15 of the $270 Montecristos to take home.

In January, Club XIX raided the nearby Park Hyatt Carmel Highlands Inn in Carmel Highlands for highly touted chef Rick Edge. At first glance, the move seemed curious for Edge. Eating and drinking is to Highlands—the site of the annual Masters of Food & Wine event that brings together some of the best chefs and winemakers in the world—what golf is to Pebble Beach. Edge had star billing at Highlands, a Park Hyatt budget, and Wolfgang Puck, Mario Batali, Robert Mondavi and their brethren regularly tasting his work. At Club XIX, he knew, his culinary creations would always be secondary to the golf. But when he visited Pebble Beach, Edge was instantly smitten with the clientele. With the amount of money that the resort's guests regularly spend—Club XIX's average check is $120 a person—Edge understood that the finest ingredients in the world would be within his reach. "Anything he could possibly imagine that he might want to cook with," says Swartz. Kobe beef is just the beginning.

At the spa, personal gratification is offered on a treatment menu that can climb toward four figures in half a day. Sure, spas elsewhere in North America can compete with this one, but none allow one member of the family to while away the hours encased in mud while another hooks balls into the Carmel Bay wind from the 17th fairway. And the spa also helps the resort connect to the community. You've always been able to get a tee time at Pebble Beach more easily by renting a room for a night than by buying a $10 million home along the fairway, which was appropriately democratic but tended to put up a wall that separated the resort from the rest of the peninsula. Now locals use the spa as a point of access, visiting for massages or day treatments.

From there, they might eat a meal at Stillwater's or up the road at Roy's and tell one another that they really should come to Pebble Beach more often, whether they end up golfing or not. That's an affluent year-round community that previous owners had never bothered to tap into.

>pAll of these new diversions have a strategic purpose. As long as the Pebble Beach name is synonymous with the golf course, business opportunities are limited to these properties on this stretch of coastline. But if an equity can be created that transcends these 18 holes, the Pebble Beach name becomes exportable.


The current ownership group is too smart to diminish the brand by spinning off Pebble Beach resorts as if they were Bennigan's franchises, but a well-placed Pebble Beach East or Pebble Beach South would be the most exciting new development in American luxury properties since Amanresorts crossed the Pacific. Such an idea is under consideration, though no site has been found.

When his group bought the property, Ueberroth characterized Pebble Beach as the best name in American hospitality. Five years later, his stewardship and Perocchi's vision have only made it better.

Bruce Schoenfeld is a regular contributor to Cigar Aficionado.