SAN CLEMENTE : City Nixes Freeze on New Hotels, Motels

City Council members have nixed a proposal from the San Clemente Hotel & Motel Assn. to freeze the development of any new hotel or motel with less than 300 rooms for at least five years.

While sympathetic to the tough economic times facing hotel and motel owners, council members said Wednesday they don’t believe government-imposed moratoriums are a solution to the recession.

“I think it’s a dangerous business for any government to try to get into the business of trying to regulate the free market,” Councilwoman Candace Haggard said.

Also, with the exception of the preliminary talks involving possible resort development near the San Clemente Pier, there are no plans before the city at this time for any new hotel or motel development, Mayor Joseph Anderson said.

Councilman Thomas Lorch was the lone dissenter in the debate, saying he would like the city to explore some sort of formula that would limit the number of new lodging rooms built each year in relation to occupancy rates.

Association representative David Lal said Thursday he would be interested in working with Lorch on such a formula.

“Growth has to be appropriate with a balance between supply and demand,” he said.

In a letter sent to the council earlier this summer, members of the association argued that the local lodging industry is “deteriorating” because of an excess supply of rooms and low occupancy rates.

“Consumers have mainly cut back on leisure and travel resulting in low occupancies and rate diminution,” the association wrote. If the trend continues, the association said there could be “financial problems for all of us,” including layoffs and a loss of tax revenue for the city.

Last year local hotels and motels experienced an average occupancy rate of about 50%, well below the 65% level needed for most businesses to merely break even, Lal said.

“Weekends are usually nice, but weekdays are dead,” Lal said.

The most visible sign of the problems facing local lodgings probably is the 110-room Ramada Inn, which is now operating under the protection of U.S. Bankruptcy Court and could someday be converted to low-cost senior citizen housing. The inn is the largest motel in San Clemente.

Lal said the association would welcome a destination resort in San Clemente since it would bring many people to the area. But he said such a resort would need at least 300 rooms, a golf course, tennis courts and swimming pools.

“They cannot put a true resort near the pier,” he said. “If you want to make the city a right destination, you have to have a proper product.”