Hotel Construction Down; Planning Up

Hotel Construction Down; Planning Up

Orange County Business Journal

Hotel Construction Down; Planning Up
By Paul Hughes


The number of hotels and rooms under construction in Orange County as of the end of June declined year-over-year but the number of hotels and rooms in planning is up.

OC has eight hotels with about 1,200 rooms under construction at the year’s midpoint; at the end of June 2016 there were 12 hotels with about 2,100 rooms under construction—declines of 50% and 43%, respectively.

The county has 50 hotels and 10,500 rooms in planning—up 47% and 55%, respectively.

The largest hotel under construction here is Marriott Irvine Spectrum, a project of R.D. Olson Development in Newport Beach.

The mid-year development numbers are from consultant and broker Atlas Hospitality Group in Irvine.

“The general picture is that development—planning [plus] construction—is up in every area of California,” said Alan Reay, Atlas president.

Hotel sales prices have risen so much in “the sixth year of a strong hotel market,” he said, “it’s more attractive to build.”

If the price of a 30-year-old hotel is the same as the cost of building a new one, Reay said, you make it new.

Atlas’ report said “favorable construction financing” is also a driver of the longer-term planning trend.

A strong economy will help areas absorb new supply but revenue per available room—known as RevPAR in the hotel industry—have begun to level off and “we remain cautiously optimistic,” Atlas said.

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