Boutique hotel planned for downtown SLO as part of Chinatown project

San Luis Obispo's Chinatown in 2011.
San Luis Obispo's Chinatown in 2011.

A new, boutique-style hotel is coming to downtown San Luis Obispo as part of the Copeland Properties Chinatown project.

Piazza Hospitality Group, a Northern California-based developer and manager of luxury hotels, spas and restaurants, will operate the 78-room hotel, including two restaurants, a spa and some retail. The hotel, which will be built with sustainability in mind, will also feature a pool, meeting space and underground parking.

Piazza Hospitality hopes to break ground on the yet-to-be-named hotel next spring, and then it will be about an 18-month construction project, said Paolo Petrone, managing partner of the Tiburon-based group, which operates the Hotel Healdsburg and h2hotel, both in Healdsburg, and manages the Mill Valley Inn, Aqua Hotel of Mill Valley and Waters Edge Hotel of Tiburon.

Copeland Properties approached Piazza Hospitality several years ago about opening a hotel in downtown San Luis Obispo, saying that the missing piece in the town was a great hotel like the Hotel Healdsburg, Petrone said. However, when the recession hit, the project was put on hold, he said.

“The downturn came, and we sort of stopped,” Petrone said. “Now, the financing world and the hotel business is back to normal, and we’re going to get it done.”

Petrone estimates that the project will cost between $35 million and $39 million to complete. The group also expects the hotel to generate about $800,000 annually in transient occupancy tax, also known as hotel bed tax, for the city of San Luis Obispo. As well, the hotel will employ about 120 people.

Beyond the Copelands recommendation, the group found San Luis Obispo to be attractive because of everything the area has to offer, including wineries and great beaches, said Circe Sher, a Piazza Hospitality partner and the group’s marketing director.

“When we went down to San Luis Obispo, there were a lot of things we really liked and identified with,” she said. “The walkability of the downtown, the unique mix of retail, the historic sites and natural beauty. We thought it would be a good fit.”

At roughly 110,000 square feet, the building will basically fill up the block along Morro and Palm streets, and has a circular drive off Palm Street, said Mark Rawson, the Copeland Properties’ architect. It’s also in keeping with the historic area of downtown San Luis Obispo, he said.

Rawson added that the Copelands are “very excited to have them on board as we move toward that ultimate goal of getting it under way.”

Additional details about the hotel’s design will be disclosed in the coming weeks as the drawings are still being produced, Petrone said.

Besides the hotel, the Chinatown project has been proposed to include retail space and residential units.