Rehoboth Beach boardwalk could have hotels at Dolle's and Candy Kitchen

In future summers, the edges of the Rehoboth Beach boardwalk could have a new, larger look.

Multiple plans are in the works to build hotels in Rehoboth Beach, one of Delaware’s most popular destinations that keeps getting busier. In the coming years, when beachgoers look back on the avenue from the sand, there will likely be more oceanfront balconies and windows than one-story shops.

Two projects could shakeup the end of the boardwalk. The longtime owner of the Candy Kitchen corner wants to build a 100-plus room building there in the image of a mid-20th century hotel. Across the avenue, Grotto Pizza is taking over the former Dolle’s with plans for a restaurant and hotel.

Elsewhere on Rehoboth Avenue, a motel is being renovated into a boutique hotel. A court battle will decide whether an office strip is replaced by another hotel.

As the beaches begin to roll into their “shoulder season” — between the elbow-to-elbow boardwalk traffic of summer and the quiet winter — here’s a look at where those projects stand.

Bellhaven Hotel

Longtime owners of one of Rehoboth Beach’s most prime locations have plans to build a four-story luxury hotel.

The project is a new version of the Bellhaven hotel at the south corner of Rehoboth Avenue and the boardwalk opposite the former Dolle’s. The Papajohn family has owned the property since the late 1930s. Their original Bellhaven stood at the site for decades before it was damaged by the Great Storm of 1962 and later taken down. It’s now home to several stores and restaurants including Candy Kitchen, The Ice Cream store and Grotto Pizza.

In November, the Rehoboth Beach Board of Adjustment granted a variance to allow the property to be developed at a greater floor-area ratio than permitted by city code, one of the first steps toward gaining approval for the project. That variance is now being challenged in court by Francis Markert, a Rehoboth Beach resident who has served on several city boards.

More than 100 residents last year signed a letter opposing the variance request. The letter argued the hotel would have an “adverse impact” on the town because its size goes against Rehoboth Beach’s character and would “open the flood gates” for further expansion in commercial areas and increased hotel density.

PREVIOUS REPORTING: Boardwalk hotel modeled after historic Rehoboth Beach landmark clears major hurdle

The court held an oral argument on Aug. 30. A judge has not yet ruled on the case.

The next step for the Papajohns is a hearing before the Planning Commission. Alex Papajohn said they’ve continued engineering the project and are waiting to be placed on the commission’s schedule to present the latest version of their plan as the court case plays out.

The plan presented last year called for 116 rooms with balconies, a zero-edge pool, a conference center, an exercise room and underground parking. There would be ground-floor retail replacing some of the stores displaced by the hotel’s construction.

The higher floor-area ratio allows the Papajohns to include higher-class amenities such as the balconies, conference center and retail, they said. Without the variance, the Papajohns said they would have to build a generic boxed-shape hotel with more rooms and fewer amenities.

Boutique hotel at the former Dolle’s

Grotto Pizza is taking over the iconic corner where Dolle’s orange script sign had long christened the Rehoboth Beach sky.

Almost a year before the classic Dolle’s sign came down, Grotto Pizza bought the property at 1 Rehoboth Ave. and the boardwalk with plans to move its Baltimore Avenue restaurant there. Now, it also wants to build a boutique hotel with underground parking in the same block.

PREVIOUS REPORTING:Big changes are coming to Rehoboth Boardwalk’s iconic corner. How Grotto is playing a role

Lynne Coan, communications specialist for Rehoboth Beach, said a concept plan has been submitted for the property. It could go to the Planning Commission in the coming weeks.

Right now, the area Grotto Pizza is redeveloping includes the former Dolle’s building, a single-story retail space, the North Boardwalk Grotto Pizza restaurant and the closed Sirocco Hotel.

Jeff Gosnear, vice president of Grotto Pizza, has said the hotel would complement other hotels near the boardwalk. Grotto Pizza has not shared specific details about the project.

330 Rehoboth Ave.

A multi-year effort to build a hotel at the gateway to Rehoboth Avenue is now in the hands of Delaware Chancery Court.

Plans for a four-story, 90-room hotel with street-level and underground parking at 330 Rehoboth Ave. have been before the city of Rehoboth Beach since early 2019. The property is perhaps best known as the former home of the Seahorse restaurant. It’s now offices with an adjacent parking lot.

The property is split into two zoning classifications: about half is zoned for commercial use and about half is zoned for residential use. The residential area is used for parking.

When the Planning Commission reviewed the property in 2019 it found two possible routes for the development. The developers could seek variances to continue using the residential zoned parcel for parking as part of the hotel plan or request the residential zoned parcel be rezoned to commercial.

The developers say the Planning Commission supported the zoning change to make the project simpler.

The project stalled because of an ownership-related dispute. Once 330 Hospitality LLC, a partnership between Gallo Realty and Lockwood Design and Construction as reported by the Cape Gazette, took ownership the application returned to the Planning Commission in May 2021. After several hearings, the Planning Commission in December recommended denying the rezoning. The city commissioners voted against the rezoning by a 5-2 vote in March.

330 Hospitality LLC is now arguing in a lawsuit against the city and members of the Planning Commission and the Board of Commissioners that they relied on “good faith” to pursue the rezoning, and the reasons shared for denying the application were flawed.

A hearing on the city’s motion to dismiss the case is scheduled for Oct. 17.

Sandcastle Motel

Harvey, Hanna and Associates are redeveloping the Sandcastle Motel at Rehoboth Avenue and Second Street.

It’s a $5 million renovation project that will transform the motel into a boutique hotel with an upscale southern European-themed restaurant, the Delaware Business Times reported. It will have 60 rooms, the same number as the motel.

Rehoboth Beach allowed some demolition work this summer. The city code prohibits demolition of structures over 750 square feet from May 15 to Sept. 15.

Like knowing what stores, restaurants and developments are coming and going in Delaware? Join our Facebook group What’s Going There in Delaware and subscribe to our What’s Going There in Delaware newsletter.

Contact Brandon Holveck at bholveck@delawareonline.com. Follow him on Twitter @holveck_brandon.

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Rehoboth Beach boardwalk could have hotels at Dolle’s and Candy Kitchen

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