Orange County Adds Fewer Hotel Rooms

The annual survey by Costa Mesa-based Atlas shows that in Orange County, seven hotels with a combined total of 1,451 rooms opened in 2002 in comparison to 13 hotels, with 3,284 rooms, in 2001. Riverside and San Bernardino counties bucked the trend. In Riverside, three hotels, totaling 725 rooms, opened in comparison to one 99-room hotel in 2001. San Bernardino had starts at four hotels to add another 299 rooms. The 2001 openings, compared to one 142-room property the previous year.

Considering conditions generally have worsened in the last two years in the hotel industry, "there is definitely a surprise in terms of the Inland Empire," Atlas president Alan Reay tells GlobeSt.com. However, he added many of the hotels being built today still reflect the better times of several years ago, days when the economy was significantly better.

Overall, Reay says, construction and planning of hotels are slowing. "Getting a hotel built almost anywhere in California is tough," Reay says. "It's tough to get financing and it's tough to get investors excited about hotels."

The Atlas report also tracks the number of new hotels and rooms in the planning stages at the end of each year, but Reay notes that the actual construction figures are a better barometer of development. "Hotel developers tend to be fairly optimistic so the number of rooms planned differs from what actually gets built," he says.

The Riverside County figures were somewhat skewed by the completion of the Pechanga Hotel at the Pechanga Casino, a 500-room project that is far larger than typical Inland Empire hotels. It was the largest hotel to open in California in 2002. It almost doubled the supply of rooms in Temecula, Reay says, and its impact is yet to be fully analyzed.

"Most of the hotel owners say they are not concerned about it because they feel that someone who is going to stay at a casino hotel is not the same customer who is going to stay in town for a business visit or a trip to the wineries, Reay says. "I'm not sure if that's the case."

Last year, the number of projects under construction or starting work dipped to 25 in Orange County, compared to 29 the year before, representing a 13.8% decline. The number of rooms under construction dropped by 27.4%, from 6,295 to 4,568. In Riverside County, the number of projects dropped from 26 to 21 and the number of rooms to 4,902 to 3,530. In contrast, San Bernardino County had 18 projects, with 1,335 rooms, planned at the end of 2002, up from 16 projects and 1,031 rooms at the end of 2001.