By Lorraine Cademartori

The elegantly low-key hamlet of Watch Hill, Rhode Island, is not easily situated—even when you’re there. Incorporated into the larger town of Westerly, “Watch Hill” is overlooked by many atlases and appears sparingly on local signage, as if holding a secret. Which it does: serene views of Little Narragansett Bay and Block Island Sound, spotless white-sand beaches, and a newly rebuilt, grand inn atop a scenic bluff, the Ocean House, which for decades had stood as a neglected sentinel, a reminder of grander times past.

Charles Royce, the president of the well-regarded eponymous small-cap mutual fund manager, has spent the past nine years working on bringing the glory back. “If you grew up in the Northeast, you knew the Ocean House,” says Royce, who began coming to Watch Hill in the early ’80s, in part because its beaches reminded
him of those of his youth—he spent summers on the Delaware coast and the Eastern Shore of Maryland.

The hotel dates back to 1868, just in time for Rhode Island’s gilded-age heyday, when Newport was the summer power mecca and surrounding beach communities, like Watch Hill, played Amagansett to its East Hampton. After a fire, the rebuilt Ocean House opened in 1916, and, in 1936, it was sold to a local family. As the automobile and airplane sapped Rhode Island of its summer prominence, the Ocean House saw its fortunes slowly fade. The veranda visibly sagged, and by the hotel’s final season, in 2003, guests were allowed only on the first floor, for fire-safety reasons. The owners sold it to a developer, who officially closed it, with plans to subdivide the property and build large, single-family homes.

Royce, who had been involved in other rehabilitation and preservation projects around Westerly, was appalled. “My motivation was that this was a really bad idea, to have six McMansions on this property,” Royce recalls. “We have enough of those in Greenwich.” So he ponied up $11.5 million. He “kind of knew intuitively you couldn’t fix the hotel,” but cooked up a plan to demolish and then rebuild it within a footprint virtually identical to the original. Locals protested: A new, glamorous Ocean House would create too much traffic and noise. Royce applied the same problem solving that has served his funds so well: Parking was addressed by building an underground lot, and guests are asked to move inside from the wraparound veranda at
10 P.M. “I’m not a developer per se in any way, but once I got involved in this, it became a full-form development project.”

Royce fixated on honoring the old Ocean House, in both spirit and style. He retained the original front doors and fireplace—each stone was numbered so it could be replaced just so—adding new windows in the exact positions as those in the old building. He bought the old hotel’s wicker furniture at auction, restoring and reupholstering it. He even took apart the original elevator car and refitted it into a modern frame. The result is old-fashioned in the best possible sense—I kept thinking a steam trunk would have been more appropriate luggage than my overnight bag. It is also new-fashioned: The 159 cramped rooms have been replaced by 57 suites and suites lite, including eight residences that can also be rented by the night.

There have been a few bumps in the road. Construction was in its final phases during the economic meltdown of 2008–09, and for Royce and his partners in the community investment group Bluff Avenue, who had sunk some $147 million into the project, “it was a moment of sheer terror, really,” Royce says. “The world was coming to an end, and it was a train you couldn’t stop. Did I question my sanity? Yes, for a while. But I decided to press ahead, thinking that the residences probably wouldn’t sell as quickly but the hotel would be a wonderful spot for people—and it’s all worked out faster than we’d thought.”

Service kinks have worked themselves out, as well. During my first visit shortly after the Ocean House’s 2010 grand opening, the valet parking was a tangle of cars, brunch service was spotty, portions at the excellent Seasons restaurant were minuscule, and during one particularly memorable phone call I was told by a bellman to “just let the water run for 15 or 20 minutes” in order to get hot water in the bathtub. A recent off-season stay revealed substantial improvement in all areas. “We didn’t know the right staffing level,” admits Royce. “We probably under hired, and then we over hired, but we kept going until we got it right. Now we’re getting résumés we wouldn’t have gotten on day one, and we’re feeling good about the quality of management we’re attracting.”

So good, in fact, that Royce remains committed to keeping the Ocean House and its about-to-be-opened sister property a few miles down the road, the Weekapaug Inn, independently operated, a rarity in this era of hospitality-chain management. “I’m thrilled not to go with anyone else,” says Royce. “Our reputation is on the line, and I want to be able to fix everything very quickly.” The bayside Weekapaug—smaller, quirkier, and with a similarly storied past—also required a major overhaul, which Royce is overseeing with Lang Wheeler, founder of the investment firm Numerics. Each owns 50 percent of Weekapaug.

“Weekapaug had a fantastic reputation, probably even a better reputation than the Ocean House back in the day,” Royce says. “They were both extremely important icons, in different ways, for New England, and both structures should be preserved, go forward, and be successful.”