Fullerton : Developer Cites Hotel ‘Glut’ in Pullout Move

Citing a “glut” of hotel rooms in Orange County, a developer pulled out of an agreement to build a hotel and conference center at Cal State Fullerton, city officials announced Wednesday.

RJS Development Inc. of Houston bailed out of the $15-million project because “the hotel market in Orange County is overbuilt,” company President Russell J. Simon wrote city officials in a June 11 letter.

According to studies completed by Economics Research Associates in 1982, the county’s hotel occupancy rate for 1986 was estimated at 73%, Simon wrote. By 1984, new building had pushed that figure for 1986 down to 67%.

The average daily room rate for 1986 also was revised downward, from $98 to $71.20, he said. Actual 1983 figures showed a 62% occupancy rate at an average daily rate of $46.53.

“The market has changed since 1982, and the benefits to our company have greatly diminished,” Simon wrote.

Terry Galvin, the city’s redevelopment manager, disagreed with Simon and said there’s room in the city for a third hotel. He said Fullerton is a separate market from nearby Anaheim and the area surrounding John Wayne Airport, both of which have a high number of hotels.

Fullerton officials now plan to put together a marketing brochure in hopes of attracting a new developer, Galvin said.

The developer’s pullout is the second setback for plans to build a 12-story, 200-room hotel. After the agreement was signed in 1983, a group of students, citing environmental concerns, sued to halt the development. The project was tied up in the courts until last summer, when the students lost their appeal, city spokeswoman Sylvia Palmer Mudrick said.