After years of adding meeting space to cater to convention and corporate contracts, hotels in Orange County quit expanding last year to ride out the downturn.
The county’s 50 largest hotels kept their meeting space virtually flat at 1.2 million square feet, according to this week’s Business Journal list, which ranks hotels by the square footage of their permanent indoor meeting space.
Three hotels—No. 14 Hilton Irvine/
Orange County Airport, No. 22 The Resort at Pelican Hill and No. 29 Atrium Hotel—added space, totaling almost 7,500 square feet.
The lack of new meeting rooms was widely expected, as the financial crisis prompted companies to scale back on conventions and incentive travel, which in turn pushed hotels to cut their budgets.
“People were obviously trying to cut expenses and just trying to maintain what they have,” said Alan Reay, president of Atlas Hospitality Group, an Irvine-based hotel consultant.
For many, the downturn would have been the perfect time to oversee construction of a renovation or expansion since there were fewer guests to disturb and construction costs were lower.
But few hotels had the financial reserves to afford any kind of big renovations.
“Hotels don’t have the money and certainly can’t get the financing in this environment to do it,” Reay said.
Most industry watchers are expecting a drop of 5% to 15% in convention business this year, but they are more optimistic about 2011.
“If a hotel was to expand and add meeting space, the business just isn’t there to justify it,” Reay said.
The general feeling in the marketplace is that less than half of meeting space was occupied last year as companies cut back or canceled conventions, tradeshows and corporate meetings, according to sources.
“The doldrums is going to continue for a while, but our expectations are that demand will start to turn positive in the second quarter,” said Bruce Baltin, an analyst with Los Angeles-based PKF Consulting Corp.
Top Spots
Disneyland Hotel retained its grip on the No. 1 spot with 136,000 square feet of space.
When the hotel opened in 1965, it also had the most meeting space in the city—a 2,500-square-foot suite.
Walt Disney Co. owns two other hotels on the list: No. 18 Disney Paradise Pier Hotel and No. 22 Disney’s Grand Californian Hotel & Spa.
The amount of meeting room space for both hotels remained flat—Paradise Pier at 20,435 square feet and the Grand Californ-ian at 20,000.
But the Grand Californian added 203 guest rooms and 50 Disney Vacation Club timeshare suites last year with an expansion.
Robert Donahue, director of groups and conventions for the Grand Californian, said the Disneyland hotels are expecting 2010 to be a better year compared to 2009.
The Hilton Anaheim, the county’s largest hotel by number of guest rooms, held its No. 2 ranking on this list with 100,000 square feet of space.
The hotel completed a $60 million renovation last year. It renovated its twin California and Pacific ballrooms with new wall coverings, carpeting and lighting and updated its 52 meeting rooms.
It also reconfigured its two outdoor pool decks that are often used for luncheons and receptions.
Each one now has 20,000 square feet of space.
“We’re converting the old bar area into the new social ballroom, isolated from our other ballroom space for those groups that come in and want dedicated space,” said Dane Gorup, director of catering at the Hilton Anaheim.
No. 3 Anaheim Marriott Hotel opened its newest ballroom last year to bring its total meeting space to 80,768 square feet.
In all, the top 10 hotels account for more than 50% of the meeting space on the list, which counts 50 hotels.
Coastal Hotels
It wasn’t just the convention-centric hotels that felt the downturn in ’09.
Many of the county’s posh coastal resorts have seen sharp declines in occupancy as people and companies stayed away from anything viewed as “luxury” this past year.
The fallout started after American International Group Inc. held a retreat at No. 8 St. Regis Monarch Beach in Dana Point shortly after taking government bailout funds.
The event to reward salespeople took on a perception of excess and cast a pall over corporate events, sending already struggling corporate business at hotels down even more.
For the St. Regis, the AIG fallout created a stigma that caused many corporate meeting planners to avoid the hotel, one industry source said.
To combat that, the resort has started offering available meeting space to nonprofits for free, with a discount on food and beverages.
For other coastal hotels, the mortgage meltdown of ’08 caused a loss in business.
No. 28 Balboa Bay Club and Resort in Newport Beach and No. 37 Surf & Sand Re-sort in Laguna Beach catered to that sector.
While no hotels added meeting rooms last year, several did smaller improvements or planned for future ones.
No. 11 Ritz-Carlton Laguna Niguel redid its 26,224 square feet of meeting space last fall as the second phase of the hotel’s makeover. The changes included new colors, drapes, carpet and artwork to conform to the new California coastal look.
No. 22 Laguna Cliffs Marriott Resort & Spa in Dana Point is undergoing a multimillion dollar renovation.
The renovation is part of new owner Massachusetts Mutual Life Insurance Co.’s plan for the hotel to compete with other upscale resorts.
The makeover will include all guest rooms, the lobby, meeting rooms, the exterior and two pools.
“We’re going after the high-end family market,” said general manager Jim Samuels.
