Hotel Construction Zooms in Southland

IRVINE, CA-The number of hotel rooms under construction in Southern California jumped by almost 74% to more than 8,200 in the first six months of 2006, according to a new report by Irvine-based Atlas Hospitality Group. Alan Reay, president of the hotel consulting and brokerage firm, tells GlobeSt.com that the new construction reflects “very good numbers in Southern California” in terms of occupancy, RevPAR and average daily rates.

“The numbers in Southern California are so good that it now makes a lot of economic sense to build hotels right now,” Reay tells GlobeSt.com. Despite the surge in the number of new hotels and hotel rooms under way, no new hotels opened in Los Angeles, Riverside or San Diego counties. Reay explains to GlobeSt.com that the new construction is a matter of timing.

The surge in new construction contrasts with a dip in the number of new rooms in the planning stages in some counties. “Most of the new hotels that are under construction got under way when interest rates were still relatively low, but the movement in interest rates in the last 12 months will hold back development somewhat,” Reay says. “Even though the numbers are good in terms of average daily rate and occupancy, the cost to borrow is making it more difficult for developers,” he explains.