IRVINE, CA—The improved economy, coupled with the spike in new hotel development, means we are seeing more owners invest considerable amount of dollars toward renovation and upgrades, Atlas Hospitality Group's president Alan Reay tells GlobeSt.com. The firm recently released its 2017 Year-End California Hotel Development Survey, which revealed that six Orange County hotels with 960 rooms opened in 2017, a 47%-room-count drop from the seven hotels with 1,808 hotels that opened in 2016.
The 271-room Marriott Irvine Spectrum was the largest hotel to open in Orange County in 2017, according to the survey. The market has eight hotels with 1,657 rooms under construction; the largest is the 613-room Westin Anaheim Resort. Orange County has 57 hotels with 11,184 rooms in planning, a 27% room-count increase over 2016.
We spoke with Reay about the emerging hotel trends he is noticing in Orange County, the comparison of hotel renovations to ground-up builds and what investors are eyeing in this market.
GlobeSt.com: What emerging hotel trends are you noticing in Orange County?
Reay: In Anaheim we are seeing for the first time the development of a number of higher-end (four-star-plus) full-service hotels, due mainly to the improved economy and the tax incentives offered through the city. In other parts of the county, the trend in development is towards higher-end limited service brands, such as Marriott, Hilton and Hyatt.
GlobeSt.com: We've heard that hotel renovations are more prevalent than ground-up builds in this market. Do you expect this to continue?
Reay: Yes. The improved economy, coupled with the spike in new hotel development, means we are seeing more owners invest considerable amount of dollars towards renovation and upgrades. In many cases, this is also being driven by the franchise companies and the property-improvement plans that they require the owners to implement in order to stay with the brand.
GlobeSt.com: What hotel formats are most common in this market?
Reay: Higher-end limited service, e.g., Residence Inn by Marriott, Home 2 Suites by Hilton, Springhill Suites (Marriott) and Hyatt Place (Hyatt).
GlobeSt.com: What types of Orange County hotels are investors most interested in at this point?
Reay: Higher-end limited service hotels less than 10 years old and coastal boutique hotels. However, any hotel that is reasonably priced in Orange County will have multiple offers and sell very quickly. Orange County is highly desirable for hotel investors today, and we are truly in a seller's market.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
