March April 2018

continues on page 6   sets RECORD in 2017! California Hotel Development By Alan X. Reay, Atlas Hospitality Group 2017 WAS A RECORD YEAR for the number of new hotel rooms opened in California. The 10,793 rooms that came online edged out the previous high of 10,286 rooms in 2008. Several factors helped make 2017 a record- breaking year for California hotel development: the availability of construction and long-term financing at very attractive rates, continued Rev PAR and hotel profitability growth and strong interest from overseas investors, especially from China through the EB-5 Immigrant Investor Program. California hotel development highlights through the end of 2017 include: f f The Golden State opened 66 hotels with a combined 10,793 rooms. f f California had 145 hotels with 20,693 rooms under construction, a 17% room count increase from 2016. f f There are 859 California hotels with 125,749 reported rooms in various stages of planning, a 23% room count increase over 2016. f f The 889-room InterContinental Los Angeles Downtown was the largest California hotel to open. f f Los Angeles County had the highest number of rooms open, with 4,309. Riverside County followed with 1,236. f f Los Angeles County has 5,327 rooms under construction. San Diego County is next, with 2,823. Although 2017 was a record-breaking year for California hotel development, 2018 is on track to be even stronger. There are 145 hotels with 20,693 rooms under construction. Despite the increase in new supply, we see sustained growth for the foreseeable future. This is due to the strong levels of occupancy and profit margins, combined with an extremely positive economic outlook—stock market and home value growth. In addition, California will continue to attract overseas investment and more international tourism from emerging markets due to the relative value of the U.S. dollar. 