Nayarit is 25 miles northwest of Puerto Vallarta. The 20.5-acre parcel is under planning for approximately 70 hillside hotels suites, a spa, restaurant, pool and retail with direct Pacific Ocean views. On the 27-acre parcel, Strategic Hotel owns a 31% interest in and will act as asset managers for a joint venture with two unaffiliated parties that is developing the 55-unit Four Seasons Residence Club Punta Mita, a luxury vacation home product that will be sold in fractional ownership interests. Its investment in the joint venture totals $2.6 million as of the end of the year.

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

The impetus to expand operations in Nayarit is likely the performance of its existing property there, which was built in 1999 and acquired by Strategic Hotels in 2001 for $49.3 million. The 140-room Four Seasons Punta Mita Hotel represents just 2% of Strategic Hotel and Resorts' portfolio, but accounted for 11% of its 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%.