El Segundo may be L.A.'s newest hot hotel market. R.D. Olson Construction has broken ground on AC Hotel by Marriott, a 98,728-square-foot, 180-room hotel in El Segundo, and says that the market is benefitting from tremendous office activity and nearby entertainment projects that bring a dynamic hotel demand to the market. The Lakers training facility is based in El Segundo, the Hollywood Park stadium development in Inglewood and the Los Angeles International airport are all helping to drive activity for more hotel projects in El Segundo.

“El Segundo is a tight-knit business community, almost like a sleeper community but it is very vibrant when you pull back the covers a little bit. They have done an incredible job on the business side, and now you see the hospitality industry meeting El Segundo's needs,” Bill Wilhelm, president of R.D. Olson Construction, tells GlobeSt.com. “El Segundo is the corporate center of Southwest L.A., and there is a need for hospitality. There are a few hotels, but you haven't seen new development of hotels like you have in other cities. There are so many great assets that El Segundo can fill needs, and I think that the hospitality market there will continue to grow.”

The growth in the surrounding market incentivized the new Marriott development, and Olson expects that there will be more to come. Not only do the entertainment projects ensure weekend demand, but the office growth in El Segundo will provide weekday demand. “Any primary location for a hotel, you have to look at the theater and the seven-day window,” Wilhelm explains. “We have a number of business users that can fill spaces during the week, and then on the weekend, you are going to have the athletic family that is traveling, whether is college or professional. The positive side to El Segundo is it puts you right where all of the activities are at. It has a tremendous amount of opportunities across many segments.”

While hotel activity is on the rise in El Segundo, the market isn't without competition. There are plenty of hotel options in surrounding markets, and Olson says that it may be difficult to push rates in 2018. “One of the challenges that El Segundo has is that it neighbors LAX and Redondo Beach, so there is a lot of hospitality projects surrounding the El Segundo market,” says Wilhelm. “It is tough because there have been so many new rooms in the South Bay market. The area has seen so many new keys. You also have so many existing keys where properties have needed to 'keep-up-with-the-joneses.' We have been into a number of existing properties and done a number of renovations to keep them current. As a result, rates have capped, and now it is a matter of who has the better product and how you can make adjustments to increase occupancy. Competition is going to be tough for the next year in that area.”

AC Hotel by Marriott has broken ground and will open in 2019.