San Diego Business Journal
New San Diego Hotel Opens, With Plenty More on the Way
By Lou Hirsh
San Diego — San Diego’s newest hotel is a 245-room Homewood Suites by Hilton, which recently opened at 2201 Hotel Circle South in Mission Valley and is managed by Evolution Hospitality of San Clemente. The property is owned by Newport Beach-based T2 Hospitality, led by founder and CEO Mike Patel, which has developed several hotels in the local market including the dual-branded Hilton campus that opened last year at the former Top’s Nightclub/Fat City site near Little Italy.
The new venue arrived as Atlas Hospitality Group recently reported that San Diego County saw a 96 percent increase from a year ago in the number of hotel rooms under construction in the first half of 2017. In the brokerage and consulting firm’s mid-year California hotel development survey, Atlas noted that the local region had 10 hotels with 1,880 rooms under construction at the year’s mid-point, and another 76 hotels with 15,179 rooms in various planning stages.
San Diego County saw the opening of two hotels with a total of 433 rooms in the first half, including the 317-room Pendry San Diego in the Gaslamp Quarter. The largest local hotel currently under construction is the 400-room InterContinental San Diego, in the second phase of the Lane Field development near the downtown waterfront.
San Diego during the past six years has witnessed steady increases in hotel room revenue, occupancy and other metrics, buoyed in part by a strong nationwide tourism economy. Atlas researchers said a combination of record sales prices for existing hotels and the availability of favorable construction financing are fueling rapid growth of new hotel rooms throughout California.
Atlas President Alan Reay noted that the state can likely absorb the increased supply of new room inventory without putting downward pressure on revenue per available room (RevPAR), as long as the overall economy remains healthy. However, researchers also pointed out that record RevPAR increases seen in California over the past five years are now starting to level off – a possible early-warning sign to developers and hotel construction lenders.
“We remain cautiously optimistic, but would advise (monitoring) hotel supply very carefully in each market before moving forward with any new hotel project,” the Atlas report said.