Orange County Business Journal
Surge in Hotel Renovations Hits Meetings, Events
From New Towers to New Tastes, Hotels Spruce Up
By Paul Hughes
Renovation has come to the fore among local hotels as construction slowed last year and several prominent redo projects concluded or are scheduled to debut.
Atlas Hospitality Group in Irvine said new projects added 960 rooms at six hotels in 2017 but that renovations finished at 13 hotels with about 3,600 rooms.
Renovation work spans the county, from Disney’s Grand Californian Hotel & Spa in Anaheim—which at more than 1,000 rooms beats new-builds by itself—to DoubleTree by Hilton Doheny Beach Hotel in Dana Point.
The new room count was down 47% from 2016, though the market is poised to regain part of the equivalent of last year’s loss this year—the Lido House by Bob Olson’s development and construction companies will open in Newport Beach in March, for instance—but renovations still dwarf new construction.
If all eight hotels under construction opened this year, they would bring 1,657 rooms to the market. Of course, that’s not happening—the 600-plus-room Westin Anaheim Resort, for one, only broke ground in September. Meanwhile, Atlas data show 10 hotels under renovation with about 3,000 rooms.
Properties with fresh looks include prominent hotel names and areas across the county, including Hilton’s Waterfront Beach Resort in Huntington Beach and the former Fairmont—temporarily named The Duke—near John Wayne Airport—both of which are scheduled to debut within weeks.
A clear win for renovation numbers isn’t a surprise; developed markets like Orange County are going to have more hotels that at any time could update their looks than they will have ground-up construction. But when renovations surge is important.
Industry experts say bursts of new product can outstrip renovations when markets are in growth mode. But when owners of older inventory feel the heat from fresh competition; go for a reflag; or property improvement plans for brand quality come due—they spruce up rooms, swap in hip restaurants, and tap meetings and events trends.
A room ratio of 2.4 to 1 of renovated hotels versus newly built suggests OC’s in the middle of that now.
“We’re seeing a tremendous amount of hotel renovation” in OC, said Atlas President Alan Reay. Property owners “want to remain competitive [and are] seeing record revenue … to invest back into their hotels.”
Meeting space is getting much of the attention, whether a hotel gets corporate or tourism business—or both.
Individually, “a resort might do weddings, dinner parties, charity galas,” while business hotels “need boardrooms and presentation space,” said Craig Sullivan, senior vice president of business development at hotel renovator Parkwest General Contractors in Anaheim. And sometimes it’s all of the above.
“Early, it could be overflow for breakfast, then a workspace during the day, then something social at night,” he said.
A room is a room, a restaurant a restaurant, but meeting space can be a tableau, with technology the palette to present a hotel’s possibilities beyond a 55-inch room HDTV.
Work gets down-and-determined in “use of space, soundproofing, complex presentations [and] lighting” with LED or colors or both….