Costa Mesa-based Ayres Hotels is one of the rare few still putting up hotels.
The family company—known for its chain of European-style boutique hotels—opened its 19th, the Ayres Hotel Chino Hills, last month.
The 124-room hotel is the third finished this year after openings in Mission Viejo and Redlands.
“Three hotels in a year is actually pretty aggressive for us,” said Donald Ayres III, vice president of operations and son of founder Donald Ayres Jr. “Historically it’s pretty much one to two hotels over a two-to three-year period.”
The company opened a 108-room hotel in Redlands in January. The 89-room Mission Viejo hotel opened earlier this summer.
Three hotel openings in a year could be considered a lot, even in good times. It’s virtually unheard of in the current downturn, which has hit hotels particularly hard.
Most hotel developers are stalling projects, while some owners have turned over keys to their lenders.
The Ayres Hotels development push is more by chance than a planned move to capture market share or take advantage of cheap land prices, Ayres said.
“They were preplanned and already through most of the entitlement stages when the economy dropped,” he said.
The company, which has about $35 million in yearly revenue, decided to move ahead after the market shifted. All three of the hotels are viable, according to Ayres.
The push may seem aggressive now. But Ayres Hotels has stuck with what it calls a conservative growth model, carefully selecting sites based on growth prospects.
Several more hotels are on the drawing board, including one in Moreno Valley set to open next year.
“We are blessed to have the resources to continue to build hotels despite the current economic turmoil,” Ayres said.
Business at boutique hotels overall is down about 20% from a year ago, according to Ayres.
“The Ontario market is hurting; Orange County has stayed relatively strong,” he said. “But it’s all down.”
The company sees a lot of repeat business from corporate and church groups, but not enough to offset the overall pullback in business travel, Ayres said.
Ayres Hotels doesn’t expect a dramatic change in 2010 with room rates projected to keep slipping amid falling occupancy.
“2010 will probably be close to the same as this year,” Ayres said.
Inland Empire
Ayres Hotels bet heavily on the Inland Empire—where it has nine hotels and has seen business hit the hardest.
“Even with our relatively steady client base, we’re down dramatically” in the Inland Empire, Ayres said.
The company said it is betting on a rebound for the region.
“It’s a pretty good area with a strong corporate community,” Ayres said. “Once everything starts to turn around, we anticipate it will kick back up to previous levels.”
Ayres Hotels likes to be the first to build in up-and-coming areas—a risky proposition that worked to its favor in places such as Laguna Woods and Seal Beach.
“We try to keep it pretty simple in trying to understand a market for a new hotel,” Ayres said. “We do our due diligence on potential properties but none of those big feasibility studies that the other hotel companies conduct.”
It has high hopes for Chino Hills east of Brea, where the city recently went through a growth spurt with little competition in the way of hotels.
History
The Ayres have a long history of development in Southern California, starting out as a homebuilder in the early 1900s.
It was in the 1980s when Don Ayres Jr. started Ayres Hotels amid changes in the homebuilding industry.
He envisioned a line of midsize hotels that would attract business and leisure travelers.
“It was my father’s desire and vision to create something, own and manage it,” Don Ayres III said.
The company’s first hotel opened in Cardiff-by-the-Sea in northern San Diego County in 1984.
The hotels first were known as Country Inn & Suites. In 2000, the family switched to the Ayres Hotels brand after opening more hotels in urban areas.
The family still largely runs things.
Doug and Bruce Ayres, brothers of Don Ayres III, are actively involved.
Bruce Ayres, the company’s former president, now oversees management and quality assurance programs as well as the family’s commercial and self-storage properties.
Doug Ayres, vice president of development, has built some of the company’s hotels.
Sister Allyson Ayres-D’Eliscu did interior design for a number of years before deciding to spend more time with her family. Her husband, Bruce D’Eliscu, a former homebuilder, works with the company.
Don Ayres Jr. still is chairman and visits each hotel on a rotating basis.
In 2003 Jim Roos, a veteran hotelier from InterContinental Hotels Group PLC’s Candlewood Suites, joined as president.
Ayres Hotels has about 700 workers in all.
The family meets every other Tuesday to talk hotel business—with an Ayres Hotels hat on the table.
“When the conversation turns to family, I’ll take the hat off the table so everyone sees we’re not talking about business anymore,” Don Ayres III said.
