Madonna Enterprises plans to build Hilton hotel in Atascadero

A rendering of Home2 Suites by Hilton, an extended stay hotel planned for Atascadero on El Camino Real near Del Rio Road.
A rendering of Home2 Suites by Hilton, an extended stay hotel planned for Atascadero on El Camino Real near Del Rio Road.

Madonna Enterprises has a new hotel in the works — this time in Atascadero.

The development company — which manages the legendary Madonna Inn in San Luis Obispo — plans to build a 120-room extended-stay hotel on 2.5 acres of the old Annex property on El Camino Real near Del Rio Road.

Unlike the Madonna Inn, which is owned by Phyllis Madonna, the Atascadero hotel will be part of a franchise: Home2 Suites by Hilton, according to Clint Pearce, president of Madonna Enterprises.

The $20 million project will go before the city Planning Commission on Wednesday before heading to the City Council. If approved, construction would start in the first quarter of 2018, Pearce said, with plans to open a year later.

MP Annex LLC, a Madonna Enterprises company, bought The Annex property in 2014, when Wal-Mart was still planning to build a 123,000-square-foot store next door.

Although the retail giant backed out of its Atascadero location in February, Pearce said Madonna Enterprises still plans to develop the 16 acres it owns in the area. Wal-Mart cited a changing market and the increased demand for online shopping as the reasons behind its decision, the city of Atascadero said.

The hotel will be the first phase of the Del Rio Marketplace development, along with six large-lot houses. The second phase will have to wait until interchange improvements are completed at Del Rio Road and Highway 101. That road revamp was tied to Wal-Mart’s plans, and would likely be contingent on a new developer purchasing the retailer’s property.

“This piece of property is a little bit removed from the main shopping center grounds we have there,” Pearce said.

Madonna Enterprises also plans to help the Atascadero Historical Society move the historic Colony House from the site to the Hotel Park, according to a city staff report.

The second phase will be retail, but the company is waiting to determine what that might be, given the changing retail climate and Wal-Mart’s final plans for its property.

Even so, Wal-Mart’s departure opens the area up for higher-end retail that wouldn’t have been possible in a “value-oriented” development, Pearce said. He said he hopes to draw a high-end grocery — such as a Whole Foods Market, a Sprouts Farmers Market or a California Fresh Market — that would anchor other stores in the development.

“Our portion of the project can be a great retail draw without Wal-Mart,” Pearce said.

Lindsey Holden: 805-781-7939, @lindseyholden27

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