Hotel Industry on Pace for Record Year

Hotel Industry on Pace for Record Year

The Daily Transcript
Hotel Industry on Pace for Record Year
By Thor Kamban Biberman

New hotel construction in California continued at a record pace during the first half of the year, according to an Atlas Hospitality Group report.

San Diego County added five hotels with a combined 860 rooms during the year’s first half, including the largest hotel opening in the state — Sycuan Casino Resort’s 302-room project in El Cajon.

The next largest hotel to open in the state during the first six months of 2019 was the 271-room Proper Hotel in Santa Monica. The next largest San Diego-area hotel opened during the first half was the 181-room Hampton Inn & Suites at Point Loma’s Liberty Station.

The 246-room Carte Hotel & Suites, which is part of the Curio Collection by Hilton, in downtown San Diego is the largest hotel currently under construction in the county.

San Diego County had 19 hotels under construction at mid-year, compared to 21 hotels though the first half of 2018. The local room count also declined from 3,410 last year to 2,310. But San Diego County’s planned hotel count rose 17 percent year-over-year to 98, representing 17,870 rooms (up about 5 percent year-over-year).

“I don’t think there will be a slowdown,” Atlas Hospitality Group president Alan Reay said. “It looks like it (2019) will be another record-breaking year.”

Reay said not only does he expect the hotel market to continue to be strong in California through 2021, he expects San Diego will be especially strong during the next 21/2 years as well.

“It’s kind of a reverse of the perfect storm,” he said, adding that lenders are lending, hotels are selling for about replacement cost, hotels are making record profits, and even Airbnb “hasn’t dampened construction.”

Not all hotel properties have more than 100 rooms. Those wanting a more intimate setting may wish to travel to Morro Bay’s Salty Sisters at Morro Rock in San Luis Obispo. It only has six guest rooms.

With 71 hotels totaling 11,200 rooms statewide, Marriott properties continued to dominate through June. The independent hotels followed with 55 hotels and 6,932 rooms. Hilton was third with 49 hotels and 6,147 rooms.

A total of 36 hotels opened across California during the first half of the year, compared with 26 openings during the like period a year ago.

The number of hotels under construction in the state increased 28 percent year-over-year to 234, while the number of rooms under construction rose 25 percent to 32,424.

Three hotels with 380 rooms went up in Riverside County with the largest being a 200-room project for the Soboba Casino Resort.

Riverside has 20 hotels with 2,411 rooms. Its largest property is the 250-room Hotel Indigo in Coachella.

Statewide, the number of new planned hotels and rooms increased by 19 and 14 percent, respectively. There were 1,143 California hotels in the planning stages and 155,782 planned rooms though the first half of 2019.

Atlas Hospitality Group said “2018 was a record-breaking year, and as we predicted, 2019 in on pace to eclipse it. Lenders and developers continue to be bullish on new California hotels as they see a very positive outlook for the Golden State.”

Lenders and developers are encouraged by the state’s revenue per available room increases as compared to the rest of the country, according to the report. High construction costs have done little to dampen the spirit of those who want to build new hotels.

“Developers continue to push forward, and lenders are keeping the funds flowing,” Atlas Hospitality stated.

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