Hotels and motels in Orange County are suffering the hangover from a building binge in the late 1980s. The spree is over, but its effect are expected to linger for years to come.
Last year, the value of new construction fell more than 55% from 1989’s rate, but occupancy rates continued to decline in the first 11 months of 1990.
Hotel operators are raising rates in an effort to offset the impact of empty rooms, but room revenues declined in three of the four areas surveyed by Pannell Kerr Forster. Only the Anaheim area, its theme parks a magnet for tourists, saw an increase in revenues--the result of a 3% hike in rates.
Food and beverage sales also declined countywide, 2.0% and 6.4%, respectively.
OCCUPANCY RATE AND ROOM REVENUES, BY REGION
In percentage change, 1989-1990, first 11 months: ANAHEIM AREA OCCUPANCY: -2.3% ROOM REVENUES: 0.7% NORTH COUNTY OCCUPANCY: -3.9% ROOM REVENUES: -7.0% NEWPORT BEACH / AIRPORT OCCUPANCY: -3.3% ROOM REVENUES: -1.6% SOUTH COUNTY OCCUPANCY: -3.7% ROOM REVENUES: -3.7% AVERAGE ROOM RATE (In dollars per day for 11 month period) : 1987: $68.49 1988: $70.04 1989: $68.71 1990: $70.44 OCCUPANCY RATE (In percent for 11 month period) : 1987: 70.8% 1988: 69.8% 1989: 69.3% 1990: 67.4% Source: Pannel Ken Forster
The value of building permits issued for hotel and motel construction in Orange County dropped precipitously in the first 11 months of 1990 from the same period a year before. 1988: $89.3 1989: $81.2 1990: $30.1 Source: Construction Industry Research Board