Surge of Hotel Development

Surge of Hotel Development

Orange County Business Journal

Surge of Hotel Development
More Than 7,000 Rooms Proposed in Four Cities
By Mark Mueller


The four Orange County cities with the heaviest volume of hotel construction are seeing a divergence in the type of properties being built there and the sorts of guests the hotels will target.

Hotel projects made up the largest source of activity taken up by Orange County’s top commercial real estate developers on this week’s Business Journal list. Eight of the 20 ranked companies completed hotels in the past year…

The developments include a number of limited-service hotels targeting business travelers and budget-conscious tourists, as well as family-friendly resorts and, most recently, high-end offerings.

Among the latter is Paséa Hotel & Spa, which opened last month in Huntington Beach. The 250-room property on Pacific Coast Highway has room rates at more than $400 and was developed by Irvine-based Pacific Hospitality Group and R.D. Olson Development in Newport Beach.

The project, along with developments in Anaheim, Garden Grove and Irvine, combined for more than 90% of the hotel rooms represented on the list that opened in OC in the past year.

The four cities also have a hotel development pipeline encompassing more than 7,000 rooms, according to city filings, brokerage data and other real estate sources.

Sites in Anaheim, Irvine, Garden Grove and Huntington Beach comprise the bulk of planned hotel development in the county. There were about 6,700 rooms under construction or in the planning phase in the county at the end of last year, according to data from Irvine-based hotel brokerage and consultancy Atlas Hospitality Group Inc.

“There’s an astounding number of new hotels” under way in OC and throughout the state, said Atlas President Alan Reay.

Part of that is the industry playing catchup after a dearth of construction following the Great Recession. Strong industry revenue figures and record pricing of hotel sales also are bringing in developer interest, according to Reay.

Recent industry data suggest the new projects come at a good time in the market.

Average room rates in OC rose 3.2% to $179 in March, according to a recent report by the local office of CBRE Hotels.

The rooms were about 79% occupied, up from 77.9% a year ago, the brokerage report said.

Revenue per available room, or RevPar, was up 4.7% from year-earlier levels. That’s its highest point since the 2007 and 2008 period, Reay said…


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