San Diego Region Experiencing Hotel Boom
By Patricia Kirk
Six hotels totaling 711 new rooms were completed in San Diego County in 2015, a 115% increase in supply from 2014, according to a hotel development report from Irvine-based Atlas Hospitality Group.
Additionally, about 2,000 rooms are under construction throughout the region, and 48 hotels with nearly 11,500 rooms are in the pipeline. The 179-room Hilton Garden Inn Old Town San Diego (above) was the largest new hotel that opened last year, and the largest hotel under construction is the 317-room Pendry San Diego in Downtown’s Gaslamp Quarter, according to NBC-San Diego.
Atlas Hospitality Group president Alan Reay says California’s hotel market is very healthy, with increases in RevPAR and many hotels opening over the last two years operating at or exceeding forecast budgets. The big concern is whether there’s overbuilding, though Atlas doesn’t believe that’s the case, since there was a dearth of new hotel rooms built from 2009 to 2013, Alan says.
Atlas also reports hotel values in 2015 exceeded record highs of 2006-2007, causing developers to re-enter the market. As a result, 34 hotels with about 4,400 rooms were completed throughout the state in 2015, and the year ended with another 98 hotels, with a total of 15,800 rooms, under construction. Chaos in financial markets is affecting cap rates and buyer/lender expectations, which is certain to impair developers’ ability to secure construction loans and permanent financing when projects are completed, according to the report.