Orange County’s hotels and tourist attractions are seeing the uptick they’ve been hoping for since 2001. The trend could bubble over in 2005, helping the industry surpass 2000’s record numbers.
Positive signs include continuing economic growth, a return of business travelers and an increase in visitors and spending.
This year, roughly 43.6 million visitors are expected to spend about $7.3 billion here. Tourist and business travel indicators show promise for 2005, including more international visitors, who may be buoyed by the weak dollar.
“We gain market share when times are good,” said Charles Ahlers, president of the Anaheim/Orange County Visitor & Convention Bureau at a recent tourism outlook conference.
OC hoteliers can look forward to filling more rooms next year. Average occupancy is expected to reach 71% next year, up from 70% this year, according to Bruce Baltin, senior vice president of Los Angeles-based PKF Consulting.
If that plays out, it would be the strongest year for hotels since 2000.
Hotel rates, too, should see an increase, with the average rate hitting $104.81, up 3.8% from this year.
“Orange County should see a healthy rate increase, but not as good as L.A.,” Baltin said.
In Los Angeles, rates are expected to grow 4.5% to $123.06.
OC’s brightest outlook may be along the coast.
There’s already enough optimism that a fledgling coalition of the county’s coastal resorts has plans to launch its own marketing campaign in spring.
“Coastal Orange County has developed into a destination unto itself,” Baltin said.
According to PKF, the coastal market is developing as one of the priciest hotel spots in Southern California, with average daily rates expected to reach $209 next year, a 5% bump from 2004.
OC has some 55,000 hotel rooms. That number is set to grow slightly in 2005, with the addition of a handful of mid-scale and extended stay hotels next year. The one exception: the 252-room Doubletree Guest Suites slated to open in Anaheim next fall. The new Anaheim Welcome Center is set to be housed at the Doubletree.
The limited growth in rooms is expected to bolster hotel profits in the next year. That could spur some projects that have languished during the down market.
At least one of those may be in Anaheim.
In recent weeks, the stalled GardenWalk entertainment and retail project in Anaheim,once slated to open in 2005,was sold to a group of investors who plan to reduce the scope of the project to 20 acres and cut the number of hotels planned to three.
On the convention front, attendance is expected to tick back up as companies loosen the purse strings, spending more on meetings, holding more of them and sending larger contingents to trade shows.
While OC convention attendance was flat for 2004, indications are it will pick up in 2005.
“For 2005, we currently have more than 900,000 attendees on the books,” said Jim Kissinger, vice president of convention sales for the Anaheim/Orange County Visitor & Convention Bureau.
That compares to about 1.1 million for all of 2003 and 2004.
To meet demand, the Anaheim Convention Center may have to find more meeting space for training sessions during conventions, Ahlers said.
One medical association alone holds 1,400 different sessions during three days that requires more classroom space than the center currently can offer.
As a result, a group of area businesses are exploring the possibility of forming a business improvement district to fund a remodeling. If it comes to fruition, it would be one of the first efforts using private investment to expand a public building, he said.
There’s a positive outlook for leisure travel as well. That’s largely driven by Disneyland’s 50th anniversary, which is expected to bring more tourists thanks to its yearlong marketing campaign for the event. The arrival of the Disney Cruise Line to the West Coast for 12 weeklong cruises also is likely to have an impact at the Disneyland Resort, where visits before and after cruises are being sold to passengers.
The Japan Travel Bureau is touting Anaheim as the central location for visitors coming to Southern California during the anniversary summer. That’s likely to drive an uptick in Japanese visitors.
The slide of the dollar against the euro also may entice international travelers to California.
San Diego-based CIC Research, which compiles visitor data for Anaheim and other cities, forecasts international travel to the region to increase by as much as 10% next year.
Meanwhile, Knott’s Berry Farm last week unveiled its $16 million Silver Bullet, the latest thrill coaster at the park. The suspended coaster with six loops takes riders along a 3,125-foot track, the longest suspended coaster in the West.
According to Washington, D.C.-based Travel Industry Association, visitors who travel to attend theme parks or visit beaches tend to stay longer and spend more than other travelers.
Another TIA study ranked California No. 1 in terms of total spending by domestic and international travelers.
The flap over renaming the Anaheim Angels highlighted the need for a consistent branding message for OC. To that end, the Orange County Tourism Council is working to develop a campaign that will help sell the county to visitors. A progress report is expected in early 2005.
If the hype over the hit Fox TV show, “The O.C.” and MTV’s “Laguna Beach: The Real Orange County” continues into 2005, that also may bolster leisure visitors.
CITY to watch: NEWPORT BEACH
Newport Beach long has held the No. 2 spot behind Anaheim in Orange County’s convention market, boasting 132,000 square feet of meeting space in its six major hotels. But the lion’s share of the city’s 3 million annual visitors are leisure travelers.
Now Newport has been put in the spotlight by Fox’s “The O.C.,” which reminds viewers on a weekly basis about the pleasures of living and playing in Newport Beach.
The city is trying to cash in on the hype.
“We’ll try to leverage as much as we can with ‘The O.C.,'” said Marta Hayden, executive director of the Newport Beach Conference & Visitors Bureau.
Newport already has hosted the cast of “The O.C.” for golf and a tour of the real OC spots featured on the show. The stars even got a key to the city.
And a new bus tour brings visitors to Newport and Fashion Island.
The visitors bureau plans to publish a “Visit The O.C.” map to be given to visitors, travel writers and for radio promotions.
Though the show is filmed in Malibu, Newport spots such as Fashion Island, Pelican Hill and Crystal Cove have been featured.
Area restaurants and hotels are getting in on the act, offering promotions and special drinks themed to each week’s show.
Still, a host of hotel renovations and expansions,including the Four Seasons, Hyatt Regency Newport Beach, Newport Beach Marriott and the Sutton Place Hotel next year,have sent Newport tourism officials in search of more corporate and association business.
Renovations are likely to raise the hotels’ star and diamond ratings, which will help draw incentive groups, according to Hayden.
There’s little chance for new projects that would expand the city’s meeting and convention space. The Greenlight initiative, passed a couple of years ago, already has derailed plans for a new resort at Newport Dunes and a smaller boutique hotel on the peninsula this past November.
What remains to be seen is if Newport Beach can grow its share of visitors without adding hotels.
Another question is whether the TV series will be enough to draw more visitors,especially families,outside the 18- to 34-year-old demographic the show covets.
,Sandi Cain
Person to watch: Alan Fuerstman
Just two and a half years ago, veteran hotelier Alan J. Fuerstman made the leap from managing hotel operations at upscale resorts in Las Vegas and Phoenix to starting his own hotel management company, Montage Hotels & Resorts.
Now he’s chief executive of an operation that’s looking to expand in Orange County and build a resort in Beverly Hills.
In 2002, the company’s first move was to buy what now is the Montage Resort and Spa in Laguna Beach from Marriott International for $190 million. Montage Hotels, Phoenix-based Athens Group and private investors own the resort.
The next challenge: to turn an unknown brand into a first-class resort in a competitive economic market.
Just two months shy of its second anniversary, the resort has made big strides toward that goal. In November, Montage was named the second-best resort in the U.S. by readers of Cond & #233; Nast Traveler. It carries a four-diamond rating from AAA. And the spa received a four-star rating by Mobil Travel Guide in March.
The resort has received a host of other awards as well as inclusion in the Best of the Best Resorts by Robb Report in 2003 and in the top 100 hotels in the continental U.S. and Canada by Travel & Leisure. Its Studio restaurant was named among the top 50 hotel restaurants by Food & Wine magazine last year.
Now Montage is in the development spotlight.
Last spring, it bought the nearby Aliso Creek Inn, along with its nine-hole public golf course and Canyon Lodge restaurant. The 80-acre, 62-room inn sold for $17.6 million, the second-biggest sale in OC in the first half of the year.
Montage also bought a 230-acre parcel called Driftwood Estates that overlooks the golf course and is approved for development.
There’s talk of expanding the golf course to 18 holes and adding villas to the resort. That has re-ignited some concern among locals who worry about the environmental impact and large-scale projects dominating the local landscape.
The Aliso Creek Inn abuts Aliso Creek, whose pollution has worsened as inland development has proliferated. It also abuts Aliso and Woods Canyon Wilderness Park, created in part to mitigate the impact of development in Aliso Viejo.
“Whatever we do in the canyon will have to be beneficial to all stakeholders,” Fuerstman said. “The common theme is to improve the environment and still provide opportunities to enjoy the setting.”
Montage also is planning a 214-room hotel in Beverly Hills north of Wilshire Boulevard between Canon and Beverly drives. The Beverly Hills Planning Commission has approved the project, which includes 25 penthouse apartments. But opponents succeeded in getting a referendum on the project in the next election, slated for March 8. Until then, the project is on hold.
Two years ago, Fuerstman said he envisioned Montage to be a small hotel company that would “gradually find other properties” that would complement the Laguna Beach resort.
Whether those opportunities play out amicably or not may affect the company’s place in the Southern California resort market.
As for Fuerstman, he expects the original Montage to be the anchor resort for many years to come.
“We’ll continue to focus on the community,” he said. “Orange County is a great place to do business,and Laguna Beach, especially.”
,Sandi Cain
