IN 2002, Doug Smith was bored. Korakia Pensione, his Mediterranean-style boutique hotel in Palm Springs, Calif., that attracted a celebrity crowd like Annie Leibovitz, Gore Vidal and Brice Marden, pretty much ran itself. Mr. Smith was looking for a new project -- a grand fixer-upper in an exotic locale -- where he could show off his well-honed style and settle into a life of rustic ease with his new wife, Josie.