Nayarit is 25 miles northwest of Puerto Vallarta. The 20.5-acreparcel is under planning for approximately 70 hillside hotelssuites, a spa, restaurant, pool and retail with direct PacificOcean views. On the 27-acre parcel, Strategic Hotel owns a 31%interest in and will act as asset managers for a joint venture withtwo unaffiliated parties that is developing the 55-unit FourSeasons Residence Club Punta Mita, a luxury vacation home productthat will be sold in fractional ownership interests. Its investmentin the joint venture totals $2.6 million as of the end of theyear.

Strategic Hotel, which also operates under the name StrategicHotels & Resorts, has ownership interests in 8,480 rooms in 18properties. The company's chief executive Laurence Geller says thetentative schedule is for its new Navarit hotel to be in servicefor the 2009 season.

The impetus to expand operations in Nayarit is likely theperformance of its existing property there, which was built in 1999and acquired by Strategic Hotels in 2001 for $49.3 million. The140-room Four Seasons Punta Mita Hotel represents just 2% ofStrategic Hotel and Resorts' portfolio, but accounted for 11% ofits earnings before interest, depreciation, taxes and amortization.The property produced $13.6 million in EBIDTA on 2005 revenues of$38.8 million. Average occupancy, at 80.2% for 2005, is up 6.6%from 2004, while RevPAR, at $462.10, is up 13.7%.