Costa Mesa-based Ayres Hotel Group has opened three hotels in the past year, broken ground on a fourth and plans to expand two Orange County sites, all in a hotel market that has been anemic for more than a year. 

To be sure, Ayres is swimming against the tide: in the past year, OC has seen the number of hotel rooms planned here plunge 25% from a year earlier to 33 projects. That compares to 55 in the planning stages in San Diego and 50 in Los Angeles, according to a mid-year report from Atlas Hospitality Group of Costa Mesa. 

Nationally, hotel projects in the pipeline were down 21% from 2001 to 336,140 in August, the fourth straight monthly decline, according to Hendersonville, Tenn.-based Smith Travel Research and F.W. Dodge Co. The number of hotels under construction nationwide in August dropped 34% from 2001 to 102,442. 

�You just have to have confidence that things will get better,� said Doug Ayres, vice president of development for the family-run boutique hotel chain. The most recent addition for Ayres is the 115-room Ayres Hotel in Seal Beach, which opened in June and brought the company�s OC hotel count to eight. Ayres has another five hotels in the Inland Empire, two in San Diego and one each in Diamond Bar and Grapevine. 

Expansions are planned at the company�s Corona West and Mission Viejo hotels. 

In all, the company � founded in Los Angeles in 1905 by Frank H. Ayres � owns and operates 17 hotels, employs 550 people and generates around $30 million in annual revenue. 

Don Ayres III, vice president of operations, said the company owned the land for all three projects and had financing in place. That made it easier to pursue the projects at a time when many big hoteliers have halted development. 
But Ayres has a different strategy than the big guys. The company tries to be among the first to tap underserved markets�such as Corona and Seal Beach � with boutique hotels. 

The company�s latest venture: a hotel in Hawthorne set to open next fall. The move comes as some hotel operators are looking to exit the Los Angeles airport market, said Alan X. Reay, president of Atlas Hospitality Group. 

�There�s no doubt it�s a tough market,� Doug Ayres said. 

The Hawthorne hotel was prompted by regular guests who often asked about hotels in Los Angeles, where Ayres hasn�t operated before now. 

�We work on a smaller margin than some people and we have hands-on management,� said Don Ayres III.

�Sometimes we can afford to go into the higher risk areas because of that.� 
Don Ayres Jr., grandson of founder Frank Ayres, still visits a handful of hotels almost daily to see how things are going and to stay in touch with the staff. But with some 2,300 rooms, hands-on management can be a challenge. 
�What we need to do to manage 17 hotels is different from when we had eight or nine,� Don Ayres III said. 

The Ayres chain isn�t affiliated with any major hotel group, so name recognition, a Web page and room reservations fall to family members and staff. 

The absence of franchise fees helps keep expenses down for Ayres, Atlas Hospitality�s Reay said. There�s a down side, too. 

�A number of the franchise companies have also built guest loyalty through frequent-stay programs and tie-ins with some of the major airlines,� he said. �This makes it difficult for an independent company to compete.� 

The company�s growth means Ayres is looking at possible changes in the way sales are managed and how reservation systems can be more efficient, Don Ayres III said. 

�We�re trying to better manage what we have,� he said. 
 

While Ayres says it takes a longer view and can live with more risk, the company isn�t hesitant to shed hotels that no longer fit. The company�s Grapevine hotel � a big bet on an emerging market � is up for sale now. The company�s not, however, family members say.  �We�re in it for the long haul,� Don Ayres III said.

Country Inn Grapevine by Ayres 9000 Country Side Court Lebec, CA

Last year, the company decided to put the Ayres name on its hotels. Until that time, all of them carried the Country Inn and Suites name. 

The change was made to better reflect the markets in which many of the properties operate, Don Ayres III said. While the Country Inn name reflected a European boutique-style hotel, the newer mission and ranch-style hotels in urban areas weren�t as good a fit for that name. 

The Anaheim hotel sits across from the Arrowhead Pond on the site of a former L.A. Fitness building. There was some concern about competing with the tourist market in Anaheim, Don Ayres III said. But the family liked the site�s visibility from the Orange (57) Freeway and proximity to the Pond and Edison International Field. 

Current occupancy at the company�s hotels is running just a little less than 70%, not counting the newly opened Seal Beach hotel, Don Ayres III said. (New hotels need about a year to ramp up to occupancy benchmark levels.) 
That puts the Ayres hotels about par with Orange County as a whole, which posted 69% occupancy through August. 

Nationally, the upscale sector in which Ayres operates is down about 4% from a year ago. And a recent report from PricewaterhouseCoopers suggests that the sagging stock market, erosion of consumer confidence and fears of war with Iraq will keep occupancy below 2001 levels until 2004. 

That could put more cost-control pressure on small hoteliers like Ayres. 
�I�m very concerned that things could get tougher,� said Don Ayres Jr. �But we just keep going.�
 
 

Sandi Cain is copy editor and a staff reporter covering hospitality,tourism, travel and sports. Cain holds bachelor�s and master�s degrees in education from Kent State University in Ohio, where she majored in social studies. A former high school teacher, she has written for niche-market sports publications in the U.S., England and Australia and formerly worked in both the printing and high-tech industries. A Cleveland, Ohio native, Cain hasbeen a resident of Laguna Beach since the late �70s. She enjoys travel, gardening, reading and spoiling her three cats.