The San Diego Diego Union-Tribune
San Diego Has More Than 1,600 New Hotel Rooms
San Diego County leads Los Angeles and Orange counties in the number of hotel rooms that debuted in 2019
By Lori Weisberg
San Diego County’s hotel industry continues to show robust growth, with a total of 1,668 new rooms opening in 2019 — a 36 percent jump compared with the previous year, reports Orange County-based Atlas Hospitality group, which each year tracks development trends in the hospitality sector.
The 2019 hotel openings are second only to San Diego’s record high of 2,402 new rooms in 2003, when a 750-room tower was added to the bayfront Manchester Grand Hyatt.
The largest local hotel opening last year was the $260 million Sycuan hotel resort, which included a 12-story, 302-room hotel. Following close behind was the 16-story, 246-room Carte hotel in Little Italy, which opened in September and cost $89 million to develop.
Among California counties, San Diego came in second, just behind Santa Clara, in terms of the number of hotel room openings in 2019. Los Angeles and Orange counties were further behind, with just 1,167 and 632 rooms, respectively, that debuted last year.
In the area of new construction, however, San Diego trailed the two Southern California counties. Locally, there currently are 15 hotels accounting for nearly 1,700 rooms under construction, which, while considered a decent amount of growth, still lags the more than 2,400 rooms that were being built in San Diego County in 2018. In California, Los Angeles led all other counties, with more than 7,000 rooms under construction, and in Orange County, there are more than 3,000 rooms yet to open, with the largest being the 613-room Westin Anaheim Resort.
Atlas CEO Alan Reay noted that despite rising construction costs, lenders continue to provide financing for hotel projects, As a result, California developers have so far not been dissuaded from pursuing projects, especially in San Diego, which remains especially attractive to investors, he said.
“San Diego is definitely looked upon favorably by construction lenders and that’s because San Diego has such a diverse base of business, from tourism to biomedical technology, and convention and meeting business,” Reay said. “And investors as well as lenders like an economy that is not heavily reliant on one industry. San Diego is one of the most desirable markets in California.”
For all of California, 2019 was a record-breaking year, with the number of hotel room openings reaching a new high of 11,795. That’s up from 10,793 rooms in 2017, a more than 9 percent increase. Like San Diego, the number of rooms currently under construction — 28,102 — is down from a year earlier.
One of the more high-profile San Diego hotel projects that has yet to make its way onto Atlas’ list of projects under construction is the long-planned Ritz-Carlton in downtown San Diego. Cisterra, a San Diego-based developer, had hoped to have the $450 million mixed-use project at Seventh Avenue and Market Street well under construction by now but a union-backed legal challenge that has since been resolved delayed construction. Cisterra Project Principal Jason Wood said the developer is close to finalizing financing and hopes to be under construction by the end of the year.
Of the 15 San Diego County hotels now under construction, two luxury hotels overlooking Oceanside Pier lead the list. Developer S.D. Malkin Properties is building the six-story, 226-room Destination hotel at the southeast corner of Mission and Pacific, and the seven-story Joie de Vivre, with 161 rooms, on the northeast corner of the same intersection.
Others include the 142-room Marriott-branded AC Hotel in downtown San Diego and a 142-room expansion of the Hotel Del Coronado.
While San Diego County’s hotel sector has shown steady increases in occupancy rates and overall revenues over the last several years, growth has slowed a bit this year, with revenues down a little more than 1 percent through the end of October compared with the same period a year ago.