City Needs to ‘Get Cracking’ to Avoid Shortage : Report Calls for 6,200 More S.D. Hotel Rooms by 1995

A consultant who projects that San Diego needs to build more than 6,000 new hotel rooms downtown over the next decade said Friday that the city needs to “get cracking” to avoid a potentially serious shortage of rooms after the planned convention center opens in late 1987.

“Meeting that (convention center) demand is a serious challenge, and there’s not much time for delay,” said Becky Burns, a senior consultant with the local accounting firm of Laventhol & Horwath. The firm presented a report on future downtown hotel room needs to the Centre City Development Corp. Friday. “If there aren’t enough rooms when the convention center opens, we’ll lose the momentum that’s building now.”

The report estimates that the city will need nearly 6,200 new hotel rooms downtown by 1995 to meet demands stemming from the now-under-construction convention center, the revitalization of downtown and growth in tourism.

Although that goal is an ambitious one, the draft report emphasized that, with efficient and relatively quick planning, the city can satisfy the demands created by the “downtown lodging market . . . evolving into a multidimensional market.”

“If additions to supply are appropriately timed and planned, the lodging market in downtown San Diego can be expected to meet the full breadth of lodging demand which is expected to be generated over the next decade,” the report concluded.

Despite the calm tone of that conclusion, CCDC directors treated the report as a clarion call that demonstrates the need for a broadening of priorities downtown.

“What this report says to me is that we’d better get moving quick to meet this demand,” said CCDC Director Jan R. Anton. The report pointed out, for example, that there could be a shortage of more than 2,300 downtown hotel rooms by as early as 1990.

“With retail, residential and office plans moving along, maybe it’s time to refocus some of our attention on the need for more hotels downtown,” added CCDC President Peter Q. Davis. “This indicates that there’s a lot more rooms needed a lot faster than most people thought.”

Noting that the supply of downtown hotel rooms has “remained fairly static for the last decade or more,” the report indicated that downtown currently accommodates about 29% of the San Diego metropolitan area’s hotel demand.

However, the report forecasts that the demand for downtown hotel rooms will increase dramatically over the next decade. The demand will be created by the convention center, and by the redevelopment and revitalization of downtown that will make the area more attractive to business travelers and tourists.

The convention center alone will create a need for 25,000 “room nights” downtown in 1987. That figure will increase to 201,800 in 1988, then to 504,600 in 1989 and top the 1 million mark by 1992, according to the report.

To satisfy that demand, 3,687 of the 6,182 new hotel rooms that the study says are needed by 1995 must be suitable for conventioneers, Burns told CCDC officials.

The report also assumes that 75% of conventioneers will want first-class accommodations downtown, which now cost about $72 per day, and the rest will seek moderate- to low-priced rooms, which average about $35 daily.

Based on that formula, 2,764 of the 3,687 rooms needed to serve conventioneers should be at least first-class quality, and 923 in the middle price range, the report said. Downtown now has 2,405 first-class hotel rooms and 712 rooms in the moderate and economy range, according to the report. The 681-room Hotel Inter-Continental, adjacent to the bayfront convention center site, near Seaport Village, is classified as a deluxe hotel.

“We do have to get cracking to accommodate that convention center market,” Burns said. The failure to do so, she said, would “certainly do some temporary . . . and maybe some long-range damage” to the convention center’s potential success.

“One of the major questions that the people booking conventions ask is about hotel rooms, and if all you can do is make promises, you might run into some problems,” Burns said. “If the rooms are built, then you can get people to sign on the dotted line. Until then, all you can do is tentatively book them.”

The study forecasts that there will be sufficient downtown hotel rooms to meet demands during the convention center’s first two years of operation, in 1987 and 1988. However, it projects that there will be serious shortages beginning in 1989 unless additional hotels other than those currently being built or proposed are developed. The predicted shortage would be 1,190 rooms in 1989, and that figure would nearly double to 2,337 in 1990, according to the report.

“Not having enough rooms when the convention center opens would be a serious problem,” Burns said. “If you don’t have enough rooms and start disappointing people the first time they try to book a convention here, they probably won’t be as quick to sign the next time. San Diego . . . loses some of its glow and some of the momentum disappears.”

Anton, a Republican activist, asked Burns whether she believes downtown would have enough hotel rooms to help attract the 1988 Republican National Convention, a goal being pushed by some local GOP and civic leaders.

“Mathematically, we could probably say no,” Burns responded, adding that cities bidding to host the 1988 GOP convention likely will need to be able to offer at least 25,000 hotel rooms. The county has about 27,000 hotel rooms, Burns said, but some of those are too far from the convention center to be feasible for conventioneers.

“This shows that we might be about four years ahead of ourselves in going after the (Republican) convention,” Anton said after the CCDC meeting. “By 1992, we’ll have a seasoned convention center and probably have an even stronger chance.”

Some CCDC officials also argued that the Laventhol & Horwath report contradicts a concern occasionally expressed by San Diego Unified Port District commissioners--namely, that construction of additional hotels in the heart of downtown over the next few years might jeopardize the economic viability of some of the port’s planned bayfront hotels.

The port commissioners have a good reason for being worried about a possible glut of downtown hotel rooms. They are counting on revenue from hotels built on their property to finance construction of the $125-million convention center. CCDC President Davis, however, contended that the study shows that those concerns may be exaggerated.

“The port would like to develop its hotels around the convention center before they’re built elsewhere,” Davis said. “But this (report) indicates that there’s a market for hotels everywhere downtown. So we might be able to develop on a parallel schedule rather than a staggered one. The demand clearly is there.”