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Hotel Construction Rises to Blistering Pace
Despite rising construction costs, California hotel development continues at a blistering pace. The latest research by Irvine, CA-based Atlas Hospitality Group reveals 182 hotels totaling nearly 25,000 rooms were under construction across the state during H1 2018.
That represents a more than 40% increase over same period in 2017, a record-setting year, and Atlas indicates a slowdown is not expected anytime soon. Developers are bullish on SoCal markets, with 2,400 rooms underway in Orange County, including 1,800 in Anaheim. Orange County experienced an increase of 100% during the first half of 2018 compared to 2017, while Los Angeles County saw a growth spurt of 25%.
Atlas Hospitality’s Alan Reay told the Los Angeles Times, “Construction costs are increasing 20% to 25%, which has caused some people to pause. But people are looking at projects in San Diego, downtown L.A., and the Bay Area on a long-term basis.”
He also notes low financing is driving development of hotels. Another factor is markets across SoCal are playing catch up to supply levels that have trailed national averages, primarily due to a lengthy entitlement process.
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*Pictured Lido House Newport Beach
