California hotel construction pipeline slows in 2020

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Construction of new hotels in California has slowed somewhat from the record pace set in the first half of 2019, according to the 2020 Mid-Year California Hotel Development Survey.

Atlas Hospitality, which specializes in the sale of California hotels, has released the results of the survey which reveals the total number of upcoming hotels in the state of California.

The number of hotels under construction decreased by 17.1% (from 234 to 194), and the number of new rooms under construction decreased by 19.9% ​​(from 32,424 to 26,418). Thirty-five hotels opened in the first half of 2020, down just one from the thirty-six hotels in 2019, but with 22.5% fewer rooms (4,515 versus 3,500), according to the latest survey on Atlas Hospitality Group hotel development.

In forecast, the number of new hotels and rooms increased by 9.0% and 5.7% respectively. There were 1,246 California hotels in planning midway through 2020, up from 1,143 last year. The rooms in planning went from 155,782 to 164,676.

SOUTHERN CALIFORNIA

LOS ANGELES COUNTY

Only one hotel opened in Los Angeles County in the first half of 2020, the 24-room Prospect Hotel. Los Angeles County leads California with 49 hotels and a total of 7,650 rooms under construction. The biggest is the bi-brand AC Hotel and Moxy Hotel in Los Angeles, the two 410 bedrooms. Los Angeles County leads the Golden State for the number of hotels (286) and the total number of rooms reported (42,484) in the planning.

SAN DIEGO COUNTY

San Diego County added four hotels with 458 rooms; the largest was the 142-room Homewood Suites in Carlsbad.

There are 11 hotels with 1,238 rooms under construction. The 226-room Destination Hotel Resort in Oceanside is the largest under construction.

The department has 100 hotels (up 2%) and 16,125 rooms in the pipeline (down 9.8%).

ORANGE COUNTY

Four Orange County hotels with 524 rooms opened in the first half of 2020. The largest was the 208-room Staybridge Inn & Suites Irvine. Orange County has 15 hotels with 2,888 rooms under construction. The largest remains the 613-room Westin Anaheim Resort, which is also the state’s largest hotel under construction. Orange County has 68 hotels and 11,978 rooms in the pipeline.

INNER EMPIRE

Seven hotels totaling 986 rooms were opened in Riverside and San Bernardino counties; the largest was the 131-room Element hotel in Ontario. Riverside County has 11 hotels with 1,248 rooms under construction; the largest is the 250-room Indigo Coachella hotel. San Bernardino County has seven hotels with 879 rooms under construction; a 451-room San Manuel Casino Hotel in Highland is the largest.

Riverside County has 100 hotels with 14,392 rooms declared in planning. San Bernardino County has 49 hotels with 4,368 rooms in the pipeline.

NORTHERN CALIFORNIA

SAN FRANCISCO COUNTY

No new hotels opened in San Francisco County during the first half of 2020.

Five 858-room hotels are under construction. The 250-room Luma Hotel in Mission Bay, San Francisco continues to be the largest. San Francisco County has 52 hotels and 6,312 rooms in the pipeline.

SANTA CLARA COUNTY

Santa Clara had opened two hotels with 249 rooms.

The largest was the 144-room Hampton Inn & Suites at the San Jose Airport. Seventeen hotels with 2,660 rooms are under construction; it is the second county in number of hotels under construction and third in number of rooms, behind Los Angeles and Orange counties. The largest hotel under construction is the 263-room M Social in Sunnyvale.

Santa Clara County has 75 hotels and 11,299 rooms in the pipeline.

SACRAMENTO COUNTY

Two hotels opened with 227 rooms; the largest was the 120-room TownePlace Suites Sacramento Airport in Natomas.

Sacramento County has seven hotels with 732 rooms under construction. The largest is a 128-room Hyatt House in Sacramento.

Sacramento County has 34 hotels with 4,772 rooms in the pipeline.

FRESNO COUNTY

Fresno County had three open hotels with 325 rooms, run by a 114-room TownePlace Suites in Clovis. Three 361-room hotels are under construction. The largest is a 151-room Courtyard by Marriott in Clovis. Fresno County has thirteen hotels and 1,340 rooms in the pipeline.

SUMMARY

In the first six months of this year, new hotel development in California has slowed from the record pace set in 2019.

With the onset of the coronavirus pandemic and the enormous impact it has had on the hospitality industry not only in California but across the United States, many planned projects have been postponed or completely abandoned. A number of new hotels that have been completed have simply delayed opening while others under construction are not pressuring their contractors to complete them. We have also seen a number of hotels under construction default on their construction loans and go into foreclosure / bankruptcy.

While no one can predict how long this pandemic will last, it is clear that the effects on the California hotel industry will be felt for many years to come.

Atlas Hospitality predicts that the vast majority of hotel projects in planning simply will not be built. The developers are already considering other uses, particularly residential. For developers who still wish to move forward with the development of new hotels, it will be virtually impossible for them to find lenders willing to finance the construction.

If there’s the good news, it’s that for existing California hotel owners, they may be at least a little less concerned about the expected wave of new offerings.


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