No Room at the Inn? 3,522 New Units Will Help
Enticed by San Diego’s high occupancy rates and the approaching prospect of the San Diego Convention Center, hotels rooms totaling 3,522 will be completed and added to the San Diego County inventory in 1987, a record single-year addition, according to a survey by the San Diego Convention & Visitors Bureau.
Much of the increase, which amounts to an 11% boost from the year-end 1986 countywide total of 32,000 rooms, is focused downtown. That has raised fears that a room glut could hurt all center city hotel operators, at least until the convention center opens in fall, 1989, said Eric Levy, a hotel industry consultant with Laventhol & Horwath’s San Diego office.
In general terms, San Diego lodging industry indicators are bullish. The February occupancy rate in 127 hotels totaling 19,500 rooms monitored by L&H; was 82.1%, far above the U.S. occupancy rate of 64.7% and 5 percentage points above San Diego’s occupancy rate in February, 1986.
In 1986, San Diego hotel room nights sold (in the hotels monitored by L&H;) grew to 4.5 million, a 9% increase over the 1985 total. Room nights sold can be a truer reflection of growth in lodging demand than occupancy rate, which is affected by the addition of new rooms, Levy said.
Severe Overbuilding Not a Problem
Also pulling hotel developers into San Diego is the fact that the city is one of the few major U.S. hotel markets that has not been severely overbuilt, Levy said.
“There aren’t that many major markets left out there that have strong operating numbers,” Levy said. “It’s harder to get hotels built here, so that contributes to the slower growth.”
The biggest draw for developers in the short term is the San Diego Convention Center, which at its opening in 1989 will create, virtually overnight, a demand for 4,450 additional hotel rooms, according to a 1983 market report prepeared for the city by Gladstone Associates of Washington, D.C.
Many of the hotels opening this year were begun in expectation that the convention center would be open in 1988, the original target date before construction delays and financing controversy set the project back a year.
Included in that group are the two largest San Diego hotels slated for completion this year: the Hotel Intercontinental’s 683-room second tower, scheduled to open Dec. 1, and the 450-room Omni International at Horton Plaza, scheduled to open Sept. 1.
In 1988, an additional 2,960 hotel rooms will be added to San Diego County’s inventory, said Ken Forbes, a research specialist with San Diego Convention and Visitors Bureau.
