Unlike other areas of the county, Garden Grove has been particularly aggressive in attracting hotel developers to the area since 1998, says Alan X. Reay, president of Costa Mesa-based Atlas Hospitality Group, a firm that specializes in hotel sales and tracking both sales and development in California.

"While Anaheim has struggled to get new rooms built, Garden Grove has added 1,900 rooms. They are very business friendly. They condemned a number of parcels at Chapman and Harbor and allowed the developers to get into the land for no cost. They forgave some occupancy taxes for four to five years, creating big incentives to develop," he notes.

Garden Grove has had six major hotel projects open since 1998, while Anaheim has had only four, Reay continues. The reason for this drive to open more hotel rooms before the Feburary 8, 2001 scheduled opening of Disney's new California Adventure theme park adjacent to Disneyland.

"I think you're going to see a lot of upward pressure on resale prices for hotel properties and room rates, because there's not a lot of supply of new product in the market," Reay explains.

Orange County is third behind San Diego and Los Angeles counties for the number of hotels planned, with 9,265 rooms in 33 planned properties (down 27 percent from 1999). The Crowne Plaza Hotel in Garden Grove, according to Atlas' 2000 Mid-Year California Hotel Development Survey, is expected to be the largest hotel opening in California for the whole year, with 384 rooms.

Essie Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University in Orange, agrees that the Disney project is largely responsible for the added hotel space. But he notes that expansion of the Anaheim Convention Center is also a key factor.

"Disney will enhance visitorship and not just foreign visitorship, but also domestic visitors from outside and inside California. It prompts new hotels for future expansion," Adibi say. "Changes to the convention center with larger capacity, they believe can handle larger events and conferences that they couldn't before. That by itself requires accommodations."

Another element to consider, says Adibi, is the business climate in Orange County that has been so strong, with the number of local startups and business expansions growing. More business activity translates into larger demand for accommodations for business travelers, he notes.

Figures released by the Anaheim/Orange County Visitor & Convention Bureau report that more than 38 million people visited the county in 1999, spending $6 billion. Ten percent of all visitors to the county last year were foreign travelers.

"International visitors are a growing and important segment of our market. With the influx of new attractions, shopping, hotels and entertainment venues such as Disney's California Adventure, we anticipate an increase in visitor attendance in 2001," says Ann Gallaugher, director of tourism development.

Instant Insights /

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