20 hotels opened during the first half, 46% fewer than the average pace of 2018-21

AUG 2, 2023, 5:26 PM

By TRD Staff

Hotel California has become Hotel Terminus, with a steep decline in new hospitality suites across the state. 

In the first six months of the year, 20 new hotels opened across the Golden State, down 31 percent in a year and 46 percent compared to the average pace of 2018-2021, the San Gabriel Valley Tribune reported, citing figures from consultancy Atlas Hospitality Group.

In Northern California, prospects were worse than the state aveage, with 10 hotels opened — down 52 percent in a year and down 46 percent compared to 2018-2021.

In Southern California, hotel prospects were slightly better, with 10 hotels opened from January through June — up 25 percent in a year but down 46 percent compared to 2018-2021.

The outlook was just as sluggish when measured by the number of new rooms available in the first six months of the year. Across the state, 2,705 new rooms were available, down 24 percent in a year and down 42 percent compared to 2018-2021. 

Southern California’s 1,210 rooms were up 65 percent in a year but down 51 percent compared to 2018-2021. 

Northern California’s 1,495 rooms were down 47 percent in a year and down 33 percent compared to 2018-2021.

“Through the first six months of 2023, California continued to see a decline in the number of new hotels added as compared to the same period in 2022,” Atlas Hospitality concluded in its mid-year construction report.

“We are clearly seeing the impact of the increased cost of new construction and as interest rates and as the scarcity of construction financing take hold, we are forecasting a big decline in new hotels starting construction for at least the next 18 to 24 months,” it said.

While the number of new hotels under construction across California has ticked up slightly, the pipeline is far below what it was from 2018-21, and with fewer rooms.

California has 122 hotels under construction — up 5 percent in a year but down 34 percent compared to 2018-2021. Southern California’s 63 is down 6 percent in a year and down 38 percent from a few years ago. Northern California’s 59 is up 20 percent in a year but down 30 percent from 2018-2021.

Hotels across the state are expected to sell 147 million nights of lodging this year – up 7 percent from last year and 1 percent below 2019, before the pandemic, according to the Valley Tribune. 

— Dana Bartholomew