For some Angelenos, Santa Catalina Island is just a distant shoreline of rough peaks often shrouded in fog. Others might know of its quaint seaside village of Avalon or its herd of buffalo.
Catalina Island Co. has been working to change that beautiful but seemingly remote public image by investing more than $50 million into new attractions and upgrades in recent years. The move has paid off with a surge in tourism, and last month the company announced the first stage of a four-year, $40 million plan to make the island, 22 miles off the mainland, stand among the region’s top tourist attractions.
“There’s a perception that Catalina’s out there,” said Randy Herrel, the company’s chief executive. “People say, I see it, but what’s there to do? We’ve built a critical mass of things to do, experiences that everyone from millennials on up would enjoy.”
The company, formerly Santa Catalina Island Resort Services, has invested more than $50 million since 2010, adding attractions and improving existing facilities. During that time, cross-channel traffic increased to 703,000 visitors from 486,000, Herrel said. Those numbers don’t include those who arrive by helicopter or private boat.
The company is the island’s largest employer, with more than 400 workers, and the largest commercial landowner. Its holdings include hotels, restaurants, and a golf course. It next plans to open two thrill attractions, start a speed boat tour, and spiff up the beach on the lesser known end of the island, Two Harbors, while also rebranding Catalina as “California’s Island Escape.”
Other developments planned in the near future include renovating the almost 100-year old Atwater Hotel and opening two wells that will increase water supply by up to 15 percent next year. The company plans to invest $10 million annually through 2020 and is studying other possible projects, including a joint venture to build a high-end hotel and more employee housing.
Herrel said the Avalon-based company expects a minimum return on investment of 12 percent; so far, it has achieved 18 percent. Herrel wouldn’t disclose the company’s revenue but said it is doing better than ever.
The moves are designed to convince Southern Californians, Catalina’s biggest source of visitors, that the island offers plenty of activities.
Linchi Kwok, an assistant professor at the Collins College of Hospitality Management at Cal Poly Pomona, said the company’s plans make sense given the trends in the hospitality industry toward being “green” and active living.
“A lot of hotels are trying to attract a younger crowd,” Kwok said. “Not necessarily millennials, but (Generation) X’s. Even younger baby boomers are very active still.”
Planting flag
Santa Catalina Island Co. Inc. was co-founded by brothers William, Hancock, and Joseph Banning in 1894 to develop the island into a resort. William Wrigley Jr., founder of the Wrigley chewing gum company, bought a controlling stake in the Bannings’ endeavor in 1919. His great-granddaughter, Alison Wrigley Rusack, and her husband, Geoff Rusack, are the largest shareholders in the privately held company, Herrel said. He declined to name the other owners but said they include individuals and organizations.
After cross-channel traffic peaked at 739,000 in 2000, the island’s infrastructure fell into disrepair and the number of visitors decreased.
Catalina Island Co. hired Herrel, a former executive at Carlsbad golf apparel company Ashworth Inc. and surf gear company Quiksilver Inc., in 2007, just before the recession hit. The company operated at a loss for the next three years, he said, so he went to the board to ask for funding to make improvements.
“It was something that had never been done in 30 to 40 years,” Herrel said.
To determine what Catalina Island Co. should invest in, it hired a market research firm to survey past and potential visitors. The company’s target customers are Southern Californians in their 20s to 60s with income between $60,000 and $150,000, he said.
The company’s projects include a club with food service at Descanso Beach; new restaurants, including the Avalon Grille; employee housing; a spa; and the Zip Line Eco Tour in Descanso Canyon, which Herrel said has been particularly popular.
“The whole atmosphere changed,” said Mike Donegan, director of marketing for ferry operator Catalina Passenger Services.
Donegan’s company used to have trouble filling up its ferry between Newport Beach and Catalina on weekdays until about five years ago, he said, but now boats are full.
“Before, there was either snorkeling and scuba diving, or, if you were my age, riding around on a narrated bus tour,” Donegan said. “Now there’s a scope of activities. The island has gotten so popular, there’s a benefit of other people investing and creating attractions.”
Climbing to top
Given the success of the zip line, the company is adding two thrill attractions to the canyon that will open this summer: the Descanso Tower Drop, in which people jump off a 60-foot tower, and Catalina Aerial Adventure, a rope course.
Responding to complaints that there’s not enough to do at night, the company is debuting an evening tour of the Catalina Casino, built in 1929, which will allow guests to dance in its ballroom and watch old historical clips.
Having more activities might make people stay longer, Cal Poly Pomona’s Kwok said.
“If people stay one night, they spend more at the restaurants, hotels, and local businesses,” he said.
The majority of the island’s visitors stay for two nights, according to Jim Luttjohann, president of the Catalina Chamber of Commerce.
At the other end of the isle, Catalina Island Co. brought in 19 truckloads of sand to revive the beach at Two Harbors. Rechristened Harbor Sands, the beach will have huts, lounge chairs as well as food and beverage service, similar to Descanso Beach Club. The company is also refurbishing group meeting spaces in the area.
To help pay for all of this, Catalina Island Co. took out a loan from a commercial bank for the first time, Herrel said. He wouldn’t say how big the loan was, but said it was small compared with the $10 million annual investment planned through 2020.
Building on the island presents challenges, since any construction materials must be transported by boat. Construction costs have increased up to 30 percent as the economy has improved, Herrel said.
