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SoCal Hotel Boom Has 13,000 Rooms Rising, Nearly 1,500 In San Diego

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Picture is BRIC 1's 19-story, dual-brand Marriott hotel, a 253-key Spring hill Suites and 147-key Residence Inn, connected by 60k SF of retail to BRIC 2's 18-story IHG Intercontinental Hotel & Resort, which is under construction on the San Diego Bay.
A rendering of a dual-brand Marriott Hotel, containing a Springhill Suites and a Residence Inn, on the San Diego Bay

Southern California is experiencing a hotel boom, with more than 13,000 rooms under construction in 2016 and another 66,000 in the pipeline. Six hotels with 1,017 rooms opened in San Diego last year, up from 711 rooms in 2015. The largest was Portman Holdings’ BRIC1, a dual-branded, 400-key Marriott SpringHill Suites and Residence Inn on the downtown waterfront. Additionally, eight hotels with 1,444 rooms, including Portman’s 400-key InterContinental Hotel, were under construction in 2016, a 32% increase from the 1,091 rooms under construction the previous year.

“I know it looks like a lot of hotel development, but no hotels have been built in more than a decade,” said Robert Green Co CEO Robert Green at a recent Bisnow event. He said hotel rooms added in San Diego during the current cycle will increase supply by just 2%.

Developers are making up for the number of rooms that should have been added between 2010 and 2013, Atlas Hospitality president Alan Reay told the San Diego Union-Tribune. He said no hotel projects were built during the first few years after the recession ended because hotels were selling for less than replacement cost. Local hotelier Robert Rauch, who is putting the finishing touches on his Fairfield Inn & Suites project in San Marcos, believes all hotel rooms completed or under construction will be absorbed within two to three years.

The hotel boom is the result of a strong economy, which is boosting hotel revenues and values and giving lenders and developers the confidence to move ahead with ambitious hotel projects. San Diego hotels have strong occupancy rates and 4% RevPAR growth, according to Green. His company just completed the 317-room Pendry San Diego in the Gaslamp Quarter.

Seventy-two hotels with 15,000 rooms are in the pipeline throughout San Diego County, according to a report from Atlas Hospitality. Green’s $300M, 821-room convention center hotel, Fifth Avenue Landing, and 565-room shared-lodging hotel on the waterfront, and Portman’s InterContinental Hotel are among them. Green doubts all of these rooms will be built, because some of the proposed hotels are in inferior locations. He said when developing a hotel, location is what matters. [SDUT]