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Does Southern California Need 472 More Hotels?

The Orange County Register
07/27/18

Does Southern California Need 472 More Hotels?
By Jonathan Lansner

https://www.ocregister.com/2018/07/27/does-southern-california-need-472-more-hotels/

 

More than a few folks in the tourism trade seem antsy these days with tough trade talks scaring off some foreign visitors and rising costs nipping at profits.

But Southern California hotel operators are staying in a construction mood, opening 11 lodging facilities in 2018’s first half with 472 more being built or planned.

The building boom suggests the long-run outlook appears sunny to local hotel executives, according to what’s found in Atlas Hospitality’s first-half summary of the hotel construction scene in the four counties covered by the Southern California News Group.

Of statewide conditions, Atlas Hospitality wrote: “Lenders and developers continue to be very bullish on new California hotel construction, as they see a very positive long-term outlook for the Golden State. The fact that construction costs are up 20 to 25 percent over the last 12 months seems to have done little to dampen the pace of development. Midway through 2018, all signs continue to be positive.”

Here are seven hotel industry trends from Los Angeles, Orange, Riverside, and San Bernardino counties …

1. What’s new: The four-county region had 11 first-half openings with 1,712 rooms: Sheraton San Gabriel; NoMad Hotel in Los Angeles; Kimpton La Peer in West Hollywood; Home2 Suites in Palmdale; Hampton Inn & Suites in Irvine; Hilton Huntington Beach addition; Lido House in Newport Beach; Courtyard Murrieta; Hotel Paseo in Palm Desert; Fairfield Inn & Suites in Rancho Cucamonga; and TownePlace Suites in Loma Linda.

2. The pace: Those new facilities compared to 16 openings with 3,399 rooms in last year’s first six months and six new hotels with 1,404 rooms in ’16.

3. Size matters: That translates to the first half’s new hotels running slightly smaller, averaging 156 rooms per opening vs. 212 last year and 234 in 2016.

4. What’s being built: 69 hotels in the region are under construction vs. 49 a year ago — up 41 percent. Rooms being built total 11,059 — a 40 percent jump.

5. On the drawing board: 403 additional hotels are planned for the four counties vs. 334 a year ago — up 21 percent. Rooms in planning total 61,341 — a 17 percent jump in a year.

6. Vacancy signs: CBRE Hotels stats for the first five months of the year reveal mixed results. In Los Angeles County, average room rates rose 0.3 percent to $210 a night but 81.8 percent of rooms were full, down from 82 percent a year earlier. In Orange County, rates rose 3.9 percent to $191; occupancy hit 79.5 percent vs. 79.3 percent in ’17. And in the western Inland Empire, rates rose 4.4 percent to $123; 78.5 percent occupancy vs. 77.6 percent a year earlier.

7. Help wanted: Government jobs records show hotel bosses in the four counties employed 96,300 in June, a record high and up 2,300 workers in a year (or 2.4 percent) and up 18,200 jobs (or 23 percent) since 2011.

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