California Hotels Set Room Growth Record in 2017

California Hotels Set Room Growth Record in 2017


California Hotels Set Room Growth Record in 2017
By Zack Quaintance


California set a record in 2017 for the number of hotel rooms opened. Sources believe this illustrates that the state is able to take on new supply.

For that reason, California is now on track to see another record year of development in 2018. Some experts, however, are wondering how much more supply the state will be able to handle before its performance begins to suffer.

California Hotels in 2017
Atlas Hospitality Group, which was responsible for the 2017 California Hotel Development Survey, predicted a strong 2017 for hotel development in California. However, experts with the group have noted that nobody expected the total number of new room openings to get as high as it did. The number of new room openings in California for 2017 reached 10,793 spread across 66 hotels.

This surpasses the previous record, which was 10,286 new rooms, set in 2008. Experts said several factors contributed to this record-setting total, including a strong California economy.

California Hotel Revenue
New rooms was not the only record that the California hotel market set in 2017. It also set a new high mark for revenue growth, which contributed to the room growth. Another contributing factor was the low interest rates and the availability of construction financing.

In the past, securing such financing had been difficult for would-be developers in California, but that changed in 2017. Another factor that pushed hotels to add more rooms than ever before, was that older assets—even those as old as 30 years in some cases—were often sold at prices that were above replacement costs.

California Hotels in Los Angeles
California is a large state, and so it is important to note that the most growth took place in Los Angeles County. That area saw 4,309 new rooms opened. Nearby Riverside County was second with 1,236 new rooms.

Experts say the growth took place in response to the expansion of Los Angeles’ convention centers and the new business that came along with them. This makes sense. In order for a city to attract users to convention center spaces, it must also have a large number of available hotel rooms nearby. Backing this up further is the fact that most of the new hotel rooms added in Los Angeles County were added in downtown Los Angeles.

One notable new building was InterContinental Hotel Groups’ InterContinental Los Angeles Downtown, which added 889 guestrooms, making it the largest hotel to open within the state all year. InterContinental also opened Hotel Indio, which has 350 rooms, just a few blocks over, plus the 216-room Kimpton Everly Hotel Los Angeles.

Overall, the city welcomed 23 new hotels for a total of 4,309 new rooms for guests. Those numbers added up to a whopping 292 percent increase over the previous year.

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