San Diego County added five new hotels with 717 rooms in 2021, the largest being the 226-room Seabird Resort in Oceanside, according to an end-year report from hotel brokerage and research firm Atlas Hospitality Group.
The additional lodging space marked a 7.8 percent uptick in room count from 2020 when new rooms totaled 665 as part of six new hotels in the county, according to the California development report from Irvine-based Atlas.
Currently in 2022 in the county, there are four hotels with 376 rooms under construction, including a 145-room AC Hotel in downtown San Diego.
The Atlas report also noted that the county has 102 hotels with 16,288 rooms currently in the planning stage.
Statewide, California set a new record in 2021 for the number of new hotel rooms opened (12,027) and the second-highest record for number of hotels that opened with 88.
In addition to the Seabird, two other large hotels in San Diego County that opened in 2021 were also in North County – the 161-room Mission Pacific Hotel in Oceanside, which is adjacent to the Seabird, and the 131-room Alila Marea Beach Resort in Encinitas.
The city of San Diego last year welcomed the 107-room Fairfield Inn & Suites San Diego Mission and the 92-room Monsaraz San Diego Tapestry Collection.
Hotels are instrumental to the financial health of all regions, according to Bob Rauch, a certified hotel administrator who is CEO and president of RAR Hospitality. Rauch is also a faculty associate at Arizona State University (where he teaches hospitality entrepreneurship) – and the person behind hotelguru.com.
Hotels Boost Local Economy
“Cities love hotels because they create occupancy tax and spinoff dollars that ripple through the economy,” Rauch said. “All these jobs are created: retail, food and beverage, and also labor.”
The original health emergency with COVID-19 and the variants which followed have hit the hotel and hospitality industry hard, but despite the Omicron variant that is still wreaking havoc among the world’s populace, Rauch said he predicts better days on the horizon.
“The 12 months beginning mid-March 2020 and ending March 2021 were by far the worst 12 months in the hospitality business,” Rauch said. “That includes 9/11, which was a big disaster, and the Great Recession. By the summer of 2021, things were loosening up and hotels had a great run. June and July were awesome. But that came to an end in November when Omicron hit.”
Rauch said the hospitality business “had an up and down year” in 2021 but that things are looking up in early 2022. Corporate travel, down 70 percent, may soon start rebounding.
“Now I would say we are in position to have a very powerful Q2,’ he said. “I predict we’ll recover completely by April 1. I have heard from our clients that they are planning a Q2 return to business travel.”
Convention Business Still in Flux
Rauch said the biggest concern was how convention plans will play out from the latest health emergency, difficult to predict because they are booked well in advance. Cities are highly competitive as they vie for opportunities to host conventions.
“It’s been a battle… there’s been hundreds of millions of dollars lost during the pandemic,” Rauch said about convention booking drop off.
Some hotel and hospitality experts are more cautious in their evaluations moving forward.
According to the American Hotel & Lodging Association’s (AHLA) 2022 State of the Hotel Industry Report, the hotel industry will continue moving toward recovery this year, but the path will be uneven and potentially volatile. Full recovery is still several years away, the report said.
The AHLA report estimated hotels lost a collective $111.8 billion in room revenue alone during 2020 and 2021.
The pandemic wiped out 10 years of job growth, the report said. Like other industries, hotels have been dealing with a major workforce shortage, which could impact its ongoing recovery.
“Hotels have faced enormous challenges over the past two years, and we are still a long way from full recovery,” said Chip Rogers, president and CEO of AHLA. “The uncertainty about the Omicron variant suggests just how difficult it will be to predict travel readiness in 2022, adding to the challenges hotels are already facing.”
Rogers said that the slow return of business travel and fewer meetings and events “continue to have a significant negative impact on our industry.”
Rise of ‘Bleisure’ Travel
The AHLA report also said that the rapid rise of so-called “bleisure” travelers (a blend of business and leisure travel) with companies allowing for more flexible schedules for employees is impacting the way hotels operate. A study of global business travelers found that 89 percent wanted to add a private holiday to their business trips in the next 12 months, AHLA reported.
Rogers predicted that hotels will continue to need to evolve to meet the needs of a different types of leisure and bleisure travelers.
The Atlas report noted that the largest hotel to open in the state last year was the 613-room Westin Anaheim Resort. Anaheim also opened the largest hotel in 2020, the 466-room JW Marriott.
Los Angeles opened 21 hotels with 3,249 rooms altogether in 2021 — the highest numbers in the state and 143 percent more rooms than Orange County, which was second last year with 1,333 rooms added in seven hotels.
Atlas said that statewide, California currently has 121 hotels under construction with 15,338 rooms and another 1,250 hotels with 164,352 rooms in the planning stages.
Hotels in San Diego continue to be impactful investments for real estate companies. In January, Newport Beach-headquartered MIG Real Estate LLC reported that it purchased both the Courtyard San Diego Old Town and the Fairfield Inn & Suites Old Town hotels for a total of $72 million.
Atlas researchers said that in 2021, similar to 2020, many hotel construction projects slowed down and in some cases were halted altogether. Some projects close to completion were delayed because of COVID-19 concerns.
But the report said that signs show hotel development jumping back into high gear over the next 18-24 months, with hospitality experts expecting new records to be set in 2023 and 2024.