The Orange County Register
07/18/17

Record Number of California Hotel Rooms Open in First Half of 2017
By Hannah Madans

Record number of California hotel rooms open in first half of 2017

The number of new hotels that opened in California increased 53 percent in the first half of 2017 and there were 15 percent more hotels in development and 6 percent more under construction vs. the same period in 2016, according to an Atlas Hospitality Group study.

“This is a record number of hotel rooms that have opened in the first six months of the year,” said Alan Reay, president of Irvine-based Atlas.

Twenty-six hotels, with 4,730 rooms, opened in the first half of 2017 vs. 17 hotels in the same period of 2016.

Reay said many hotels are being built now because the price of buying and renovating older hotels is high, that it is more attractive to build a new hotel, construction financing and loans are readily available and there have been six years of revenue increases.

In Orange County three hotels with 461 rooms opened during the first half of the year. They were:

AC Hotel Irvine: The 176-room hotel in the Park Place development opened this spring.

It is less than two miles away from John Wayne Airport.
It has a pool, fitness center and three meeting spaces.

An affiliate of Irvine-based Pacific Hospitality Group owns the property. PHG runs the hotel.

AC is a Marriott brand.

Homewood Suites by Hilton Irvine John Wayne Airport: The 161-room hotel opened this winter. It offers studio, one- and two- bedroom suites. Each has a fully equipped kitchen.

The hotel has a fitness room, pool, business center and meeting rooms.

The project was Irvine-based R.D. Olson Construction’s first partnership with hotel management and development company DKN Hotels, also based in Irvine.

Staybridge Suites Anaheim at the Park: The 124-room hotel opened earlier this year. It is an all-suite hotel. The suites have full kitchens.

The hotel is near Disneyland Resort.

It has a business center, fitness center and a pool.

Orange County currently has eight hotels with 1,194 rooms under construction. The largest is the Marriott Irvine Spectrum, which will have 271 rooms.

The county has 50 hotels in planning, a 47 percent increase from the number in planning this time last year. The 50 hotels will result in 10,474 new rooms, a 55 percent increase from the number in planning a year ago.

Orange County had 58,723 hotel rooms at the end of 2016, according to Visit Anaheim.

The biggest hotels in planning are a 600-room Nickelodeon resort in Garden Grove, a 466 room JW Marriott at GardenWalk and a 700 room luxury resort near Disneyland.

According to a CBRE Hotels report, hotel occupancy in the first three months of 2017 decreased 0.7 percent. The average daily rate, though, increased 2.2 percent resulting in a revenue per available room increase of 1.5 percent.

The concern some have is that all the development will change that.

“Oversupply is always a concern,” Reay said. “One of the big issues we have is that when we do well, people add more rooms and create an oversupply. If the economy continues to grow, what we’re seeing is the properties that have opened and are under construction will be absorbed. The concern comes if we’re still bringing this amount of inventory to the market in ‘20 and ’21.”

He added that it would be older hotels that have not remodeled that will be in trouble. Some of those properties would likely be sold for alternative uses.