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SoCal Hotel Construction Pipeline Starts to Fill

BY SANDI CAIN

Although Orange County saw zero hotels open in the first half of 2005, the construction pipeline is picking up.

Seven local hotels with 868 rooms were under construction at the end of June, compared with 385 rooms in three hotels last year, according to a report from Costa Mesa-based Atlas Hospitality Group.

“The increases in daily room rates and hotel occupancies, combined with higher sales values, are making new hotel development a little easier,” said Atlas President Alan X. Reay.

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Orange County’s overall hotel occupancy was 74 percent at midyear, with the average daily rate hovering around $120. In July, occupancy in Anaheim was as high as 94 percent in the week following the launch of Disneyland’s anniversary party.

Preliminary July numbers from PKF Consulting in Los Angeles showed overall Orange County occupancy at 87.5 percent and an average daily rate of $122.

Most of the hotels under construction had been in the planning stages for some time.

“The hotel stock in Orange County is in pretty good shape,” said Bruce Baltin, senior vice president of PKF Consulting.

Projects in the works in Orange County include the Doubletree Guest Suites and Courtyard by Marriott in Anaheim, Hampton Inn & Suites in Cypress, Staybridge Suites in Lake Forest, the Strand in Huntington Beach and the Balboa Inn expansion in Newport Beach.


Hotel To Feature Visitor Center

The 252-room Doubletree Guest Suites is expected to open before the end of the year and will be home to the Anaheim Visitor Center. The Doubletree is set to include 7,200 square feet of meeting space, high-speed Internet access, a pool, fitness center and restaurant.

A block away, Newport Beach-based Tarsadia Hotels Inc. is building a 150-room Courtyard by Marriott that’s set to open next spring and feature a Ruth’s Chris Steak House.

The 110-room Hampton Inn & Suites in Cypress broke ground in May and is expected to open by next spring. The hotel, at Yamaha Way and International Avenue, will include meeting space and should draw business travelers from a nearby business park expansion.

In Lake Forest, developers plan to open a 129-room Staybridge Suites by Holiday Inn by the end of the year. Development partner Chris Chiu said the hotel will include two conference rooms for small meetings.

CIM Group Inc.’s 150-room Strand Hotel Huntington Beach likely won’t open until late 2007, according to Tom Miller, the vice president of investment and development.

Miller said the utility work is done and work on the parking garage is set to get under way at the end of the month.

The 12-room expansion of Balboa Inn in Newport Beach will include new shops, a pool, Jacuzzi tubs and high-speed Internet access. The inn’s Web site said the expansion would be complete this fall.


Works In Progress

The Headlands Resort in Dana Point, a 65- to 90-room boutique hotel that’s part of a 121-acre residential, retail and hotel project, is set to break ground next year. Grading for the residential part of the project is under way, according to developer Sanford Edward.

Edward said construction on the hotel would start once the home lots are sold.

The hotel will include an 8,000- to 10,000-square-foot spa and a 3,000- to 4,000-square foot restaurant.

The Sheraton at the International West in Garden Grove is set to break ground by January.

Not included on Atlas’ report is the Irvine Co.’s Pelican Hill Resort, a 204-room project set to break ground this month. Groundbreaking was announced in July, after the midyear report was issued.

Regionally, only five new Southern California hotels opened in the first half of the year, compared with 13 in 2004. But more hotel projects are in the works.

Ventura County has the most rooms under construction at 1,000. That includes the second-largest project under construction in the state, the Four Seasons in Westlake Village.

Los Angeles has the most hotel projects in the works with 11.


San Diego In The Lead

San Diego leads the state in the number of rooms planned, with 10,365 rooms in the pipeline. San Diego also accounted for 40 percent of all new rooms opened in the first half of this year and had the largest hotel opening, the 462-room Harrah’s Rincon expansion in Valley Center.

Atlas’ Reay said the number of rooms opened and under construction in Ventura outweigh the number in the planning phase by 190 percent.

“A typical ratio is 10 percent,” he said.

Orange County was at 26 percent at midyear. Reay said the figures illustrate a better environment that helps developers complete hotel projects.

Trends that have yet to hit the Orange County market include boutique hotels and so-called condo-hotels that combine a residential element with a traditional hotel.

Orange County’s wealth and style-consciousness lend itself well to the boutique market, said Larry Broughton, whose Huntington Beach-based Broughton Hospitality Group has bought boutique hotels in Santa Barbara and Santa Monica. The high cost of existing hotels and land creates barriers to entry, Broughton said.


Sandi Cain writes for the

Orange County Business Journal.

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