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First Significant Large Scale Hotel Development in the Palm
 Springs Area in 15 Years -Two Casino Hotels Add 571
 Hotel Rooms in 2004

By Kimberly Pierceall, The Press-Enterprise, Riverside, Calif.
Knight Ridder/Tribune Business News

Mar. 4, 2005 - Hotel room construction in Riverside County last year jumped 182 percent, due largely to the opening of hotels at Morongo Casino, Resort and Spa and Fantasy Springs Casino, according to an annual hospitality report.

"The huge jump in rooms is really attributed to the casino hotels," said Alan Reay, president of Atlas Hospitality Group, a Costa Mesa-based brokerage and consulting firm that releases an annual state wide development survey.

Riverside County saw the biggest increase in new rooms since 2003 compared with a 132 percent increase in Los Angeles County and double-digit drops in Orange, San Diego and San Francisco counties.

But hotel developments are expected to slow in the Inland Empire and across the state this year, making it a seller's market for hotel owners and a more expensive stay for visitors, said Reay.

Bruce Baltin, a senior vice president with PKF Consulting, said he sees development slow here and "everywhere in the country."

After 9-11, construction costs were low but financing was high, Baltin said. Recently, construction costs have spiked and financing costs have improved. Once the two factors settle, Baltin said more developments will crop up.

"The slowdown will reverse itself," he said. But he doesn't expect to see results until 2006 or 2007.

Together, the Morongo Casino, Resort and Spa and Fantasy Springs Casino added 571 rooms. They were the second and third largest hotels opened last year respectively, according to the report. The 512-room Omni hotel in San Diego was the largest in the state.

Ed Svitak, the president of the Palm Springs Hotel and Hospitality Association, said that besides the casino hotels, no large hospitality development has taken place in the Coachella Valley in 15 years. The last large project, the Renaissance Esmeralda in Indian Wells, brought 560 rooms to the Coachella Valley in 1995.

Reay said Palm Desert and Rancho Mirage "are the only areas where I could see any larger full service hotels being developed in the future, but not right now."

No plans are under development, but Svitak said several are in the pipeline for Palm Springs in 2006 or 2007, such as a 400-room Indian Oasis Golf and Spa Resort in Palm Springs from Noia Investments and the Agua Caliente Band of Cahuilla Indians and a long-delayed Shadowrock Development in Palm Springs from Mark Bragg .

He said if those or other developments open in the same year, the new room percentages could see a substantial increase again.

Until then, Reay said that the slowdown will be a blessing for current California hotel owners for the next two to three years because less competition will mean higher daily room rates and more guests.

"It's probably going to mean higher rates for the traveler, less discounts and deals," he said. And for hotel owners looking to sell, "prices are up and way up in Riverside County," he said.

ROOM FOR GROWTH: Hotel rooms built in 2004 compared with 2003

--Riverside County: 182 percent increase

--San Bernardino County: 70 percent decrease

--Orange County: 65 percent decrease

--San Diego County: 55.6 percent decrease

--Los Angeles County: 132 percent increase

--Sacramento County: 48 percent increase

--San Francisco County: 46 percent decrease

SOURCE: Atlas Hospitality Group

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To see more of The Press-Enterprise, or to subscribe to the newspaper, go to http://www.PE.com.

Copyright (c) 2005, The Press-Enterprise, Riverside, Calif.

Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

 
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