By Orange County’s construction-impinged hoteliers are crossing their fingers in the hopes that this summer will bring a long-awaited turnaround.
Despite the booming economy, Orange County’s 50 largest hotels posted only slight gains in employment in the past year, according to this week’s list. Total employment at the hotels inched up 1.9%, from 13,251 at the hotels on last year’s list to 13,497 for those on this year’s list.
The picture is worse when looking at the performance of the hotels on this year’s list vs. their year-ago figures, in which employment dropped 1.4% from 13,692 last year.
Either way, hotels are a laggard in terms of OC job growth. Overall, countywide employment in all industries was up 3.1% to 40,900 at the end of the first quarter vs. the same period a year ago.
The mixed hotel employment picture is the result of several factors. In Anaheim, the county’s tourism hub, occupancy has been flat or lower due to ongoing construction at and around the Convention Center and Disneyland. Other hotels suffered because of the increased cost of hiring in a tight labor market, or simply because they can’t find enough help amid competition from new hotels.
Mixed Message
In all, 20 hotels reported an increase in workers, 14 reported a decrease, and 16 saw no change. Of the five that reported double-digit employment decreases, four are in North County, the area hardest hit by a decline in business due to construction.
Still, five hotels reported double-digit increases in employment, including two in Anaheim and one in Buena Park , even though the Buena Park hotel was closed for a while in the past year as it converted to the Radisson at Knott’s.
David Aramaki, general manager of the Holiday Inn at the Park in Anaheim, which reduced its staff by about 25, said his hotel’s downsizing actually resulted from the conversion of more people to full-time status, reducing the need for additional part-timers.
“Business is stable now,” Aramaki said. “We have more full-time than part-time people now.”
One Anaheim property, the Disneyland Pacific Hotel, was among the biggest gainers on the list , up 17% to 350 employees. The hotel defied the Disneyland-area trend partly as a result of stepped up marketing by resort officials.
The other top gainers were hotels catering to business travelers in and around John Wayne Airport: The Embassy Suites OC Airport North, up 18% to 122, and the Costa Mesa Marriott Suites, up 15% to 138.
Overall, OC hotels saw average occupancy hold steady at 71% in the first quarter. Visitors paid slightly more for rooms than they did a year ago as the county’s average daily room rate went from $110 to $113 as of the end of March.
Demand Up
Hotel industry officials and analysts said they saw demand pick up in March and are looking for that trend to continue.
“March was the busiest month in our property’s history,” said Jim Huffman, general manager of Embassy Suites OC Airport North in Santa Ana. “Our average daily rate was up 12% and our sales were up 18%.”
The sentiment is echoed by other hotel operators.
“Business has been better this year than last year,” said Bill Gunderson, general manager of the Fullerton Marriott, No. 46 on the list.
Bjorn Hanson, global industry leader of PricewaterhouseCoopers Hospitality Leisure Practice, recently predicted a 3.6% increase in demand for lodging this year, given the continued strength of the U.S. economy. But he cautioned that those gains could recede beginning in 2001 when the economy is expected to cool slightly from the red-hot pace of growth seen in the past few years.
Indeed, occupancy rates, reported by 36 of the 50 hotels, were 80% or better at six Orange County properties, with the Country Inn and Suites by Ayres in Costa Mesa and the Newport Beach Marriott Suites reporting the highest occupancy at 83%, a full 12 percentage points above the average for the area.
Country Inn’s general manager, Charles Knowlton, said they know they compete against the “flag” hotels.
“We position ourselves as a boutique hotel,” he said. “We know the business traveler is looking for that, so we try to maintain a family feel.”
Other properties reporting occupancy rates well above the average were: Costa Mesa Marriott Suites, 82%; Anaheim Fairfield Inn by Marriott, 81%; and the Embassy Suites Anaheim and Ritz-Carlton Laguna Niguel, both at 80%.
The area’s worst occupancy , 38% , was reported by newcomer Doubletree Irvine Spectrum, but that property has not yet been open a year and new hotels can take up to three years to reach their potential.
Other properties reporting occupancy below OC’s average were the Crowne Plaza, Irvine and the Sheraton Newport Beach, both at 57%. The Sheraton Newport Beach is slated to become a Radisson next month (see related story, page 55).
Despite a spate of new hotel construction under way that will add about 2,500 rooms in the next year, the room total on this year’s Business Journal list of 50 largest hotels, ranked by room count, is 18,897, up just 1% from 18,658 a year ago. The Hilton Anaheim and Towers still tops the list. At 1,572 rooms, it’s a third larger than its neighbor, No. 2 Anaheim Marriott.
The Doubletree Irvine Spectrum, whose 252 rooms opened last June, just missing the 1999 list, is the only new hotel to make the list this year, debuting at No. 35.
Another property, the Anaheim Fairfield Inn by Marriott, returns to the list this year at No. 11 after a three-year absence. That property, formerly known as the Ramada, was converted in 1997 to a limited-service hotel with no food service available on site,one criteria by which a property is judged to be full-service. Now the Fairfield, whose 467 rooms are geared toward the leisure market, has added a caf & #233; and snack shop, qualifying it once again for inclusion.
Fairfield’s Director of Sales Jeff Hasty said the property will also have Internet access on all in-room TVs by June. In addition, Hasty said the Fairfield, which cut out meeting space to create a game room and other leisure amenities, is planning to add meeting space again.
Raising the Bar
For the first time since 1997, the cutoff for the No. 50 spot was 200 rooms,a size that will increase as other new hotels come on the market. The Grand Californian Hotel on the grounds of California Adventure is under construction and will add 750 rooms to the mix when it opens next January. If that property were open now, it would be the fourth-largest in the county.
Also under construction is the 484-room Crowne Plaza in Garden Grove, a hotel that currently would tie for No. 10 on the list with the Doubletree Hotel Costa Mesa. And the as-yet unnamed Monarch Beach hotel, at about 325 rooms, would rank No. 20 this year.
Those three properties alone would displace this year’s No. 48, Irvine’s Atrium Hotel; No. 49, Embassy Suites, Buena Park, and No. 50, Residence Inn by Marriott, Anaheim, which have 214, 201 and 200 rooms respectively. Their inclusion would also raise the bar for the list to a minimum of about 220 rooms. Last year the cutoff was 196.
Already bumped from the list by the 200-room cutoff was the Doubletree Guest Suites, Dana Point, whose 196 rooms have kept it clinging to the No. 50 spot since 1996. And last year’s No. 39, the Jolly Roger Hotel, is down to 57 rooms since owner Tarsadia Hotels, Costa Mesa, began the conversion of another 247 rooms into a 190-room Portofino Hotel that is now under construction (see related story, page 55).
A number of new hotels have opened in the past year, but most are under the 200-room threshold, including the Hilton Garden Inn and Hampton Inn in Garden Grove adjacent to the Hyatt Alicante and a Country Inn and Suites by Ayres that opened last month in Mission Viejo.
Revolving Door
While the hospitality industry is known for rapid turnover in top management, the county’s 50 largest hotels have seen 21 management changes since this list was last published in December , and that’s on top of the couple of dozen changes between last May and December. Some of that movement came as a result of the merger between Hilton Hotels and Promus Hotels, which afforded longtime OC anchors like the Hilton Anaheim’s Glenn Hale to pursue other options within the industry. But, as with other industries, some changes were the result of increased competition.
Mark Kallenberger, a Costa Mesa hospitality consultant, told the Business Journal last December that finding good managers for smaller 100- to 200-room properties is “clearly a concern” for the future, especially as larger, full-service hotels come on line.
All of Orange County’s cities don’t benefit from having a large, full-service hotel within their boundaries, however: only 12 of OC’s 33 cities have any properties among the 50 on this year’s list.
Anaheim Still Dominant
Anaheim continues to dominate the OC landscape, with six of the largest 10 properties in that city. Other cities with hotels among the largest 10 are Irvine (2), Costa Mesa and Newport Beach. In all, Anaheim has 16 of the 50 hotels on the list. Its next closest competitor is Irvine, with seven, followed by Newport Beach and Costa Mesa with six each.
Other cities represented on the list include: Buena Park and Fullerton, three each; Orange, Dana Point and Huntington Beach, two each; and Garden Grove, Santa Ana and Brea with one each.
Anaheim gained a hotel this year with the re-inclusion of the Fairfield; Irvine gained one with the opening of the Doubletree. Anaheim will gain at least one more,the Grand Californian,next year, while Garden Grove will boost its count when the Crowne Plaza opens and Dana Point will gain when the Monarch Beach property opens. Newport Beach may have to wait until the 400-room Newport Dunes Resort is complete to add to its full-service inventory, and Huntington Beach won’t get a significant increase until the 500-room companion hotel to the Hilton Waterfront planned by the Robert Mayer Corp. is complete. Construction on that hotel is scheduled to begin in June.
Changing Hands
For the third straight year, a number of hotels on the list underwent ownership or management changes. The most significant of those came when Hilton Hotels Corp. merged with Memphis-based Promus, a hotel REIT. As a result of that merger, Hilton now has eight hotels in OC that are company owned or managed, with another 10 on franchise agreements.
Other major changes included the Anaheim Marriott’s $80 million purchase by Tarsadia Hotels from Lend, Lease that gave Tarsadia about 15% of the rooms in the Anaheim area and the purchase of the Holiday Inn Costa Mesa by Newport Beach-based Hanford Hotels from Linquist & Craig.
Only five hotels decreased their room count in the past year,most due to a conversion of concierge or business classrooms to regular rooms. But catering to business travelers remains a priority at most of the large properties: 38 hotels said they offer Internet access, with 21 saying they have high-speed T-1 line access and two more indicating they will add T-1 lines in the near future. Twelve of the largest 30 hotels have video conferencing capabilities. n
