High-end hotel Coast to replace Sandcastle Motel in Rehoboth

After more than a year of speculation and a lot of visible renovations, the new owners of the former Sandcastle Motel in downtown Rehoboth Beach have revealed they are turning the decades-old building into Coast, a high-end hotel aiming to attract coastal foodies, families and business travelers.

Under the name Rehoboth Hotel LLC, Newport, Del.-based developer Harvey Hanna purchased the property a year ago for $13.2 million. Almost immediately, the company began a top-to-bottom renovation estimated to cost about $5 million. The property, which sits on the northwest corner of Rehoboth Avenue and Second Street, has an address of 123 Second St., but the restaurant and hotel lobby will face Rehoboth Avenue.

The name and high-end theme of the hotel came to light Nov. 18, during a permit-of-compliance hearing before city commissioners related to the hotel’s new restaurant Sirocco. Because it’s also a new hotel, the permit of compliance allows developers to own and operate a full-service restaurant in the hotel, which is required to be eligible for a hotel liquor license from the state. 

Attorney Vince Robertson and TKO Hospitality partner Vince DiFonzo represented the hotel at the Rehoboth meeting.

Robertson said Sirocco will be an upscale, southern European-style restaurant that’s open to the public and a vast improvement on what was there before. It will be the polar opposite of Conch Island, he said.

DiFonzo said TKO Hospitality operates 15 hotels and restaurants, including the Hyatt in Dewey Beach and the Hyatt House outside Lewes. He said the restaurant will feature menu items from countries that border the Mediterranean Sea – Italy, Greece, Spain and France.

It will be coastal elegance, said DiFonzo. An upscale property that features a two-hour dining experience, he said.

Robertson said there are no expectations for live entertainment or live music. The size of the restaurant is about 2,800 square feet, which is well under the threshold for Rehoboth Beach, he said.

Robertson said there had been talk about outdoor dining areas, but ultimately the developers decided not to pursue that option, which would have required a supplemental permit of compliance.

Scarborough Avenue resident John Dewey voiced concerns about noise after he saw plans that included Rehoboth Avenue-facing glass walls that opened all the way up.

In response, DiFonzo assured Dewey that Sirocco will have a much different atmosphere than what was there before and noise will not be an issue. There had been talk about having floor-to-ceiling sliding walls, but ultimately the design includes solid walls with large windows that slide open, said DiFonzo. Customers want the fresh air, but they’re not going to be used to blast the town, he said.

Following a brief discussion, commissioners unanimously approved the permit of compliance.

Following the hearing, DiFonzo said the expected completion date for the project is May 2023.