Southern California hotel development is on the rise with more than 13,000 rooms under construction during 2016, plus 66,000 more in the planning pipeline.
According to The San Diego Tribune, “Los Angeles easily rivals all other counties with 7,239 rooms currently being built, including a 900-room InterContinental nearing completion in downtown L.A. The 73-story high-rise, the largest hotel in the state to begin construction last year, is due to open in the spring.”
The sudden boom lends itself to a six-year post-recession run-up in room revenues and rising hotel values. Also because of the relatively strong economy, lenders and developers have the confidence to forge ahead with these ambitious projects.
Alan Reay, president of Atlas Hospitality, believes that the absence of development between 2009 and 2011 was because, “everything was selling way below replacement cost.”
“Some would argue that the new rooms today are making up for the supply we should have had over the last several years,” Reay said. “It’s like the housing market, people build more and more and pretty soon you have an imbalance. Are we at that imbalance stage today? No, because we’re just making up for the amount of rooms that should have been added between 2010 and 2013.”
Orange County has 11 hotels (1,655 rooms) under construction which is close to the amount added last year which totaled to seven hotels and 1,808 rooms. Orange County contributed to a 198 percent increase in last year’s hotel openings with the Great Wolf Lodge Southern California, a $250 million indoor water park and 603-suite hotel in Garden Grove. According to Atlas Hospitality, there are an about 72 hotels with almost 15,000 rooms currently in various stages of planning in San Diego County.
The numbers continue to stay strong for several years, according to an Atlas survey, with 40 hotels with 8,808 rooms in some stage of planning in Orange County.