MANY OTHERS IN WORKS COULD BE NIXED
Monday, September 7, 2020
Orange County saw new hotel openings nearly double in the first half of the year, thanks to a trio of Lake Forest properties catering to business and leisure travelers, according to a report by Irvine-based hotel consultancy and brokerage Atlas Hospitality Group.
Four Orange County hotels with 484 rooms opened in the first half of 2020, marking a notable jump from the same time last year, when two hotels totaling 280 rooms opened. All four opened prior to the coronavirus halting the area’s tourism industry in its tracks.
The largest property to open in Orange County in the first six months of the year was the 168-room Staybridge Inn & Suites Irvine, along Barranca Parkway, a few miles from John Wayne Airport.
The other three hotels opened in Lake Forest, adding 316 rooms to the city. They include:
• Homewood Suites Lake Forest, with 116 rooms
• TownePlace Suites Lake Forest, with 112 rooms
• Hampton Inn Lake Forest, with 88 rooms
In Los Angeles, traditionally a driver of hotel development for the state, only one property opened in the first half of 2020: the 24-room Prospect Hotel in Hollywood.
“California new hotel construction has slowed somewhat from the record-breaking pace set in the first half of 2019,” Atlas Founder Alan Reay notes.
The number of hotels under construction dropped 17% in the state, with the number of new rooms under construction down 20%.
In Orange County, there are 15 hotels with 2,888 rooms under construction, which is down 15% and 12%, respectively, from 2019.
“A number of new hotels that have been completed have simply delayed opening, while others under construction are not pressuring their contractors to complete,” said Reay, who has also seen a number of hotels under construction default on their construction loans and enter into foreclosure.
The high-end JW Marriott Anaheim Resort with 466 rooms was slated to open in March but delayed its opening to August amid the ongoing closure of Disneyland and a shrunken visitor pool.
Planned Hotels in Question
The outlook is murky for planned hotels.
The onset of the coronavirus pandemic “has resulted in many planned projects being deferred or abandoned all together,” Reay said.
The largest hotel under construction in the area continues to be the 613-room Westin Anaheim Resort, which is also the largest hotel in the state under construction. That property, led by Anaheim-based Wincome Group, is projected to open next month.
Orange County has 68 hotels and 11,978 rooms in planning, up 1% and 14%, respectively. Statewide, planned hotels are up 9%, with a 5.7% increase in planned rooms.
However, Reay’s firm is forecasting that most hotel projects in planning will “simply not get built,” with developers looking at other uses, namely residential.
“For those developers that still want to move forward with new hotel development, they are going to find it virtually impossible to find lenders willing to provide construction financing.”
The bright side?
“For existing California hotel owners, they can be at least a little less concerned over the anticipated wave of new supply,” Reay said.