TOURISM
Orange County has endured several years of freeway expansion and construction of new visitor attractions that along with weakness in the number of international visitors have played havoc with the local tourism industry. But within the next six weeks, the majority of the county’s tourism remake will be complete, and OC could be poised for a visitor boom.
There’s just one thing standing in its way: a slowing economy could temper the expected increase in visitor numbers and, thus, the bottom line for hoteliers, theme parks and even the revamped Convention Center.
The Convention Center, wrapping up a $180 million renovation, will fully reopen Dec. 28 with 1.6 million square feet, a new lobby and dramatic design that has brought praise from industry officials across the country. Freeway improvements include now-open offramps that take traffic from the Santa Ana (I-5) Freeway more directly into the Disneyland Resort.
The Disneyland Resort expansion itself is nearing an end,for now,with the scheduled openings of the Grand Californian Hotel on Jan. 2 and the 300,000-square-foot Downtown Disney retail and entertainment complex on Jan. 12. And Disney’s $1.4 billion California Adventure theme park is slated to open Feb. 8, with projected attendance of 7 million in its first year.
The county is expected to end 2000 with about 40 million visitors, up roughly 5% from 1999. That number is projected to grow to 41.9 million next year. Despite obstacles, the county had a pretty good year from both business and leisure visitors. Disneyland, helped by its 45th anniversary celebration, a new parade and fireworks show and a remodeled Autopia, is expected to end the year with attendance up 10% or more from last year’s roughly 13.4 million visitors. Meanwhile, Knott’s Berry Farm garnered good reviews for its $25 million Soak City water park that debuted in June. And though its new thrill ride, Perilous Plunge, didn’t open until late in the summer, a strong response to Soak City and the Peanuts 50th anniversary celebration has helped Knott’s post strong attendance of about 3.5 million for the year. Meanwhile, the Anaheim Convention Center unveiled its new lobby and renovated halls B and C last January. Bookings for 2000 were up by 7%, and Anaheim/Orange County Visitor and Convention Bureau officials put their best foot forward in welcoming trade groups from Latin America and the Travel Industry Association,both of which brought their conventions to Anaheim for the first time. Bureau officials expect convention business to pick up next year with the fully remodeled Convention Center available. Officials are aiming for the 1 million attendance mark last posted in OC in 1994. And with visitors spending an average of $58 per day here, that increase would be welcome by area businesses. A handful of hotels opened in the county this year, including the 384-room Crowne Plaza in Garden Grove and a 162-room Homewood Suites on the same redevelopment parcel in that city. Towne Place Suites by Marriott opened in Anaheim in June. A remake of a portion of the Jolly Roger Hotel in Anaheim into the Portofino Suites (a Tarsadia Hotels property) opened in September. Disney’s 750-room Grand Californian will be the first hotel to debut in 2001,but several others will follow on its heels. Notable hotel projects under construction include the five-star St. Regis Resort at Monarch Beach by Capital Pacific Holdings and Starwood Hotels that is expected to open next summer. The Anabella,a makeover of three older motels on Katella Avenue in Anaheim,will open by spring, and a Holiday Inn and Staybridge Suites under construction by R.D. Olson will open in summer. Further out, the Balboa Bay Club broke ground on its two-year, $55 million expansion in November that will add a 131-room luxury hotel on the property by 2003. And two Ritz-Carltonsat Park Place in Irvine and at Treasure Island in Laguna Beachhave 2002 opening dates projected. Construction of large, full-service hotels in the area spurred an increase in union activity from the 5,000-member Local 681 of the Hotel Employees and Restaurant Employees Union, which picketed a few non-union facilities, a trend that is likely to continue unless the economy heads south. The future for hotels not already under way, however, is more cloudy. Bear Stearns Cos. lodging analyst Jason Ader early this month downgraded the lodging sector in response to weakness in the U.S. economy. And with hotel financing already tight, projects like the $500 million Pointe Anaheim, a retail and entertainment complex planned to go in near Disneyland with up to 1,000 hotel rooms, could find the going even more difficult. In addition, the passage of the slow-growth GreenLight initiative in Newport Beach cast doubt on the Newport Dunes’ expansion plan. And the long-awaited Waterfront Hilton expansion in Huntington Beach still has not broken ground,though it reportedly will do so in the next month or two. Hotels should end the year at about 72% occupancy, up about four percentage points from 1999, and with an average daily rate of roughly $110 for all segments, up about 5% from 1999. If the expected increase in visitors to OC materializes and more hotels are slow to come on the market, local hoteliers can expect to command higher room rates in the immediate future. Los Angeles-based PKF Consulting forecasts that OC’s occupancy and average room rate will continue to rise in 2001, to 74.5% and $118.42, respectively. While industry officials believe the U.S. hotel cycle has peaked, Southern California remains one of the top buy/build markets in the country, according to HVS International, a hospitality consulting firm, which also sees no industry recession on the horizon. n
