Potential for hotel development in San Diego in 2001 continues to look good, according to a local analyst’s forecast.
Robert Rauch, a Del Mar-based managing director for InterBank Brener Hospitality in New York City, noted in his report that hotel debt financing is in transition.
Because Wall Street has abandoned both large, securitized, individual assets, loans and development loans, local and regional banks that often better understand the local market are again preeminent in hotel finance, he said.
Rauch expects San Diego’s hotel market to continue to peak and to eventually tighten.
Still, 2001 will be very profitable for the local hotel industry, unless the country is forced into a recession by an unexpected problem, he said.
A potential damper is the conflict in the Middle East, which could create an oil crisis and, in turn, cause problems with the economy that could slow down the hotel development market, Rauch said.
A healthy economy and high consumer confidence has propelled the lodging industry’s strong performance this year, he said. For now, he doesn’t expect a recession.
Rauch noted the local hotel market’s strength throughout 2000. Occupancy rates should average 73 percent, and room rates should average $107, he said.
Compared to 1999, occupancy rates remained flat, but the room rates will have grown 5 percent, which is ahead of the growth in the consumer price index, Rauch said.
Room Rates To Climb
Predicting the local market in 2001, occupancy levels will likely remain at 73 percent, but average room rates will climb to $111, he said.
Stronger areas will likely continue to be La Jolla, University City, Downtown San Diego, waterfront properties and the North County Coastal area, he said.
Hotel supply is particularly needed in markets such as Downtown, the coastal strip areas of La Jolla, Del Mar and Carlsbad, Rauch said. Rauch expects convention business to be strong, with a boost from the opening of the expanded San Diego Convention Center.
Although consumer confidence should be strong, the leisure market will have to brace for the February opening of Anaheim’s new Disney theme park, he said.
Rauch also offered his take on when many hotel projects in the county would open.
Running through many that are Downtown, Rauch said he doesn’t think the Westin, which is being developed near the Padres’ ballpark site by Padre owner John Moores’ company JMI Realty Inc., will be stalled by the halt in the ballpark’s construction.
As for the Hyatt Regency San Diego’s expansion, a project of locally based Manchester Resorts, it’s “anybody’s guess,” but it will happen, Rauch said.
Another Manchester project, a third convention headquarter hotel to be built on the Campbell Shipyards site, wasn’t even on Rauch’s list of projects. It’s currently mired in litigation and environmental clean-up problems.
When pressed, Rauch said he personally didn’t expect it to be built before 2005.
Downtown Projects
As for other Downtown projects, Rauch expects the W Hotel to open in 2002, and the Amerisuites project to open when the ballpark does, which could be mid-2003. The Hampton Inn has already broken ground and will open in early 2001 or the end of this year, he said.
As for Mission Valley projects, Rauch said the Marriott Courtyard, which has secured financing and is reported to have begun construction, will likely open in 2001.
Rauch was particularly enthusiastic about the 100-room expansion and upgrade of the Lodge at Torrey Pines, owned by locally based Evans Hotels. He expects it to be completed in 2002.
A 2002 opening is also expected for the 200-room hotel and conference center on a La Jolla site owned by UCSD and being developed and operated by Hotel del Coronado operator Destination Hotels & Resorts, a division of Los Angeles-based Lowe Enterprises.
In North County, the Del Mar Marriott, which has broken ground in Carmel Valley, will likely open in late 2001, he said.
Also in Carmel Valley is Rauch’s own project, a Del Mar Homewood Suites. The hotel will have 195-200 total units and will likely open in early 2002, he said.
Another Homewood Suites project, in the Carlsbad and Oceanside area, would likely open in 2003, he said.
A Marriott Courtyard project planned for the Rancho Bernardo/Poway area will likely open in 2003, and a Hilton Garden Inn and Springhill Suites will likely open the year before, Rauch said.