Golden Triangle a Treasure for Hotel Builders : Booming Area to Gain 2,200 Rooms by 1990s

What’s in a name?

Plenty, for guests checking into La Jolla hotels in order to enjoy the fabled cove, beautiful beaches, upscale shopping and some exceptionally good places to eat.

Consequently, a few guests at the La Jolla Marriott have been disappointed to learn that Pacific Ocean sunsets, elegant eateries and Prospect Avenue’s posh shops are, at best, a 10-minute drive away.

“Some people do get confused and wonder why we aren’t at the corner of Wall and Girard,” acknowledged Reint Reinders, general manager of the Marriott on La Jolla Village Drive near University Towne Centre.

Guests can’t see the ocean from the La Jolla Marriott, but from the hotel’s perch at the bottom of the Golden Triangle they have ready access to the burgeoning industrial and commercial zone that has hotel executives drooling.

The La Jolla designation “gave us some additional benefits, but the decision to build was based on the tremendous growth in the Golden Triangle,” said Reinders, who quickly added that the Marriott falls within the La Jolla ZIP code.

By the early 1990s, Marriott, Hilton, Sheraton and Hyatt hotels will operate in the La Jolla/Golden Triangle area. That quartet and a handful of other developers will spend more than $250 million to build 2,200 upscale hotel rooms and affiliated restaurants and meeting facilities.

Hotels near the Golden Triangle that can feature La Jolla in their name are destined to enjoy the best of both worlds.

“You’re looking at the magic of La Jolla’s name, and it’s a worldwide name, right up there at the top of the scale,” according to Joseph Kordsmeier, a Carmel-based hotel consultant. “It does have magic, especially to outsiders, and it’s a very big magic that can add an extra $5 or $10 to a room rate.”

“During the next 10 years, every major (hotel) company in the country is going to come to San Diego,” said Howard James, a former Sheraton Corp. executive vice president who now operates a hotel management consulting firm in San Diego. “And La Jolla is going to be very hot.”

Temperatures already are rising, according to the San Diego office of Pannell Kerr Forster, an accounting firm that tracks hotel construction. It says these hotels are likely to be built:

- Marriott, which earlier this year opened its $40-million, 360-room hotel in La Jolla near University Towne Centre, plans to open a 150-unit, all-suite hotel near Mira Mesa Boulevard and Scranton Road.

- Holiday Inn recently opened a 144-unit, all-suite Residence Inn on Gilman Drive in La Jolla.

Another Holiday Inn subsidiary recently finished structural work on an Embassy Suites Hotel on La Jolla Village Drive at Towne Centre Drive. The 330-unit hotel is scheduled to open in June.

- Hyatt plans to build a 400-room hotel and meeting center at Naiman Corp.’s “Aventine” development on La Jolla Village Drive, east of Interstate 5.

- Sheraton, which has been in negotiations since 1983 on a proposed hotel at the Torrey Pines Golf Course, now hopes to open the 400-room hotel by early 1989.

- A 120-room Ramada Inn is planned at Mira Mesa Boulevard and Scranton Road.

- Additionally, four other hotel developments and two additions at existing La Jolla hotels are proposed during the next few years. Those proposals include a 210-room hotel and conference facility near UCSD, an 86-room addition to the Torrey Pines Inn on North Torrey Pines Road, and a 31-room addition to the La Valencia in downtown La Jolla.

The La Jolla/Golden Triangle room boom will burst the high-occupancy-rate bubble enjoyed by hotels elsewhere in San Diego County, especially if the downtown convention center opening is delayed beyond 1989.

But rather than simply swiping business from Hotel Circle, downtown and Mission Bay, the new hotels will cater to “a whole new marketplace that wasn’t there in 1985 or 1986,” according to Kordsmeier.

“I’ve never seen so much construction as along I-5 and I-805,” Kordsmeier said. “Those new commercial office buildings and new residential neighborhoods are tremendous demand generators.”

Unlike downtown, Mission Bay and Hotel Circle, however, La Jolla/Golden Triangle isn’t relying on the proposed convention center, the San Diego Zoo or Sea World’s Shamu to generate business. Rather, the area depends on one whale of an industrial base that already provides 35,000 jobs. That base probably will swell to as many as 70,000 jobs by 1990, according to Ted Owen, a vice president and director of the North City office of the San Diego Chamber of Commerce.

“As long as the commercial growth that is forecast for the area continues, there won’t be a glut,” according to Ron Watanabe, who tracks hotel growth for Pannell Kerr Forster in San Diego. “La Jolla and the Golden Triangle are coming into their own as a business area, and as a result, hotels are popping up left and right.”

As the number of biomedical, high-technology, industrial and medical companies increases, the area will need classy and convenient lodgings for an increasing number of business travelers.

Those travelers are willing to pay top dollar for the right accommodations.

Even with a $125 corporate rate, the Marriott has enjoyed an 80% occupancy rate, according to Reinders.

That high occupancy rate--described by industry observers as unusual for a new hotel--has been generated by a business community that is hungry for nearby lodgings, restaurants and meeting facilities, Owen said.

“We can have a high-tech conference at the Marriott, go over to UCSD, walk through the Supercomputer Center, and do it all in the space of two hours,” said Owen, who has thrown nearly 30 chamber functions at the Marriott. “You can’t do that at the Sheraton on Harbor Island.

“You don’t have to drive downtown, parking isn’t a hassle and prices are about the same.”

To Reinders and Kordsmeier, the rapid pace of development in La Jolla/Golden Triangle is reminiscent of rapid development that, 15 years ago, transformed the area surrounding Newport Beach.

“My La Jolla friends might not like to hear this, but I see (in La Jolla Golden Triangle) the same things that were going on in Orange County 10 years ago,” Reinders said. “Look at (the area near) John Wayne Airport, and it’s peanuts compared to what (San Diego) will be adding.

“It’s going to happen here but in a more orderly fashion,” said Reinders, who spent seven years at Marriott hotels in Orange County.

The pent-up demand for rooms in La Jolla/Golden Triangle probably will mean that proposed projects will obtain financing despite the recent federal tax law changes. The changes in depreciation schedules have eliminated the tax advantages of building unprofitable projects.

The new rules won’t hurt La Jolla/Golden Triangle proposals because they are “economic deals, not tax-driven,” said Bruce Goodwin, a San Diego-based senior principal with the accounting firm of Laventhol & Horwath. “This is the place (for hotel operators) to be right now. You’ve got an affluent bedroom community (nearby) and that corporate community feeding in the business.”

Pent-up demand also seems likely to insulate La Jolla/Golden Triangle from developing the glut of upscale hotel rooms that is beginning to stall new hotel development in other parts of the country.

Building those hotels is an expensive proposition because land costs--which are soaring beyond $1 million per acre in prime locations--are pushing per-room construction cost to an average of $120,000.

Consequently, budget hotels will be priced out of La Jolla/Golden Triangle. “Land costs just won’t allow it,” Kordsmeier said.

Hotel industry analysts are worried that, as commercial and industrial development advances, the area will be paralyzed by increased automobile traffic.

“That’s the only downside” in the La Jolla/Golden Triangle area, Goodwin acknowledged.

When it comes to getting into La Jolla during rush hour, “you might as well park your car and walk” from Interstate 5, Kordsmeier complained.

The land squeeze is exacerbated because La Jolla/Golden Triangle sits below a pair of flight paths from Miramar Naval Air Station. Citing safety reasons, the Navy has objected to the planned Sheraton at Torrey Pines and the Torrey Pines Inn’s proposed expansion.