Irvine Co. Rethinks Hospitality Business, Temporarily Shuts 2 Orange County Hotels

The Orange County Register
04/24/20

Irvine Co. Rethinks Hospitality Business, Temporarily Shuts 2 Orange County Hotels
Hotel Irvine, Fashion Island Hotel temporarily closed. 1,076 jobs impacted.
By Jonathan Lansner

Irvine Co. rethinks hospitality business, temporarily shuts 2 Orange County hotels

As coronavirus ravages the tourism business, the Irvine Co. will use the closure of two hotels to rethink its hospitality properties and how they operate.

The 536-room Hotel Irvine and the 295-room Fashion Island Hotel in Newport Beach have temporarily shuttered, along with dozens of competitors across the nation as pandemic fears quickly shut down travel. The company recently filed a layoff warning notice with the state that said 1,076 workers would be affected.

But in a letter to the community, the real estate giant said it wouldn’t simply be idling the hotels. Rather, some significant retooling may be in the works to meet what it sees will be changing needs of travelers in a post-pandemic world.

“It is clear that the hotel industry will evolve into a new level of hotel guest expectations and service,” the company wrote of planning that “may include the repositioning and reimagining of our hotels with a focus on delivering a first-class clean, safe and healthy environment for our local communities, our guests and our hotel service personnel.”

The company, owned by billionaire Donald Bren, the nation’s wealthiest real estate operator, should have the financial strength to make such dramatic moves. A decade ago, as the Great Recession was ending, Irvine Co. made a bold leap into homebuilding well before others dared to do the same. That bet paid off handsomely.

No details on the hotel plans were revealed. The letter said the company said it is planning “to reopen the two hotels with quality improvements and modern features in the near term.”

Irvine Co. added that its Resort at Pelican Hill — with 204 rooms and 128 villas — will stay open. “We have been able to serve our guests in a responsible manner during this pandemic period maintaining strict health and safety guidelines.”

The Irvine Co. is not alone with hotel challenges in an industry that just months ago was in a boom, if not overheated, condition.

Just ponder this sampling of Orange County hotel businesses that have filed state layoff notices involving 200-plus workers since March 1:

Hilton Anaheim (1,038 workers impacted)
Anaheim Marriott Hotel (617)
Hyatt Regency Huntington Beach (587)
Waterfront Beach Resort, Huntington Beach (502)
Ritz-Carlton Hotel, Dana Point (474)
Hyatt Regency, Garden Grove (369)
JC Resorts, Laguna Beach (288)
Newport Beach Marriott (278)
Pasea Hotel & Spa, Huntington Beach (277)
Marriott Laguna Cliffs, Dana Point (256)
Balboa Bay Club, Newport Beach (247)
Irvine Marriott (242)
Anaheim Majestic Garden Hotel (222)
Hyatt Regency Newport Beach (216)
Sheraton Park Hotel, Anaheim (209)
Doubletree, Orange (206).

The picture is not pretty for the hotel industry. A grim report by the American Hotel & Lodging Association states the financial damage to travel nationwide is nine times worse than the post-9/11 decline of 2001.

Jobs? Seven out of 10 hotel positions are gone — jobs with wages totaling $2.4 billion every week. Including all work tied to tourism, that’s 3.9 million U.S. workers unemployed.

And rooms? 80% empty, worse than the Great Depression. That means cash flow will be halved for 2020.

Green Street Advisors says the share prices of hotel trusts have been halved since Feb. 21.

Alan Reay, hotel analyst at Atlas Hospitality, thinks the larger, full-service hotels — the ones with restaurants and banquet services — will have the toughest recoveries.

“Hotels that rely on the meetings’ business are not expected to fully recover until 2023/2024 at the earliest,” he said.

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