Orange County hoteliers saw more competition open up in the past year, but they�re still waiting for a tourism comeback to bolster occupancy rates.

Total room count on this week�s Business Journal list of the 50 biggest OC hotels rose 2% to 20,924 versus last year�s top-50 list, thanks to the addition of 1,150 rooms at three new hotels.

Meanwhile, countywide occupancy was flat at 65.9% through June this year, while average room rates were down 4.1% to $110, according to Los Angeles-based PKF Consulting.

The war in Iraq and a lackluster economy contributed to anemic performance by the county�s hotels in the past year. Other contributing factors were a 12% decline in the number of international visitors to the U.S. in 2002 and the still-lingering effects of the Sept. 11, 2001, terrorist attacks.

Hoteliers contacted for this story generally agreed that group business has been soft in the past year but that inquiries are increasing�often an indication that better times are ahead.

�Pent up demand has to happen eventually,� said Stephen Beck, director of sales at the Hilton Costa Mesa.

Beck said central OC has been posting high occupancy numbers, �but not at the rates we�d like.�

Starting rates at the 44 hotels that provide figures range from a low of $62 at the No. 46 Holiday Inn Anaheim at the Park to $450 at the No. 41 Montage Resort & Spa in Laguna Beach. Fourteen hotels have rates starting at less than $100. But special rates are common across all segments of the industry.

The largest nine hotels all have 500 or more rooms with No. 10 Coast Anaheim Hotel at 499. Only 1% of the 47,000 hotels and motels nationwide have more than 500 rooms, according to the American Hotel & Lodging Association.

Of the 47 hotels open last year, 30 reported occupancy rates that ranged from 50% to 85%.

The Embassy Suites Hotel Anaheim South posted 82% occupancy on the strength of leisure travelers, according to general manager Dominic Acolino. �People are traveling to the Anaheim Resort, for Disney in particular,� Acolino said. 

�Overall, we�re having an excellent, rock-solid summer,� said Disneyland Resort spokesman Bob Tucker. �Booking is continuing that way into fall,� he said.

Even industry pundits haven�t been sure what�s in store for the travel industry since the terrorist attacks. A market once expected to be back on track by the end of this year now hopes that a recovery takes shape before 2005.

PricewaterhouseCoopers, which has track-ed the hospitality industry and projected future trends for several decades, now does forecasts with different scenarios: war or no war; terrorist attacks or no terrorist attacks.

It�s not easy for hotel managers, either.

�We were down in 2002, and so far we�re flat in 2003,� said Mark Zovic, general manager at the Radisson Newport Beach near John Wayne Airport. �It�s coming back now, but unfortunately, it�s still not the business traveler,� he said.

Coastal Resorts Are Booming with Summer Visitors

�Our summer business is exceeding our expectations,� said Marguarite Clark, a spokesperson for the Montage Resort & Spa. �We have healthy occupancy.� And at the St. Regis in Dana Point, director of marketing Jim Kelley said he expected August occupancy to reach 85%.

Though visitor numbers have increased slightly this summer, hotels are not yet optimistic enough to add staff.

Total employment for the hotels on the list is up 6% to 14,705 compared to last year.

But that�s on the strength of new hires at three hotels: No. 8 Hyatt Regency Huntington Beach Resort & Spa with 517 rooms, No. 24 Anaheim Marriott Suites with 371 rooms and the Montage with 262 rooms. Those hotels added 1,400 jobs. Without the newcomers, hotel employment fell 4% to 13,305. Anaheim alone accounts for 5,325 of the jobs at the largest hotels.

The new hotels raised the minimum to make the list to 238 rooms, up eight from a year ago. Hotels not making the cutoff included the Anaheim Ramada, Holiday Inn Costa Mesa and Hilton Suites Anaheim/Orange.

Of the hotels that provided employment figures, 8 saw an increase, 15 a decline and 19 no change.

The biggest cut in workers was at the county�s largest hotel � the Hilton Anaheim � where staff fell 25% to 900. Until this month, the Hilton was the largest hotel in Southern California, with 1,572 rooms. But San Diego usurped the title in early August when the second tower of the Manchester Grand Hyatt opened, bringing its total to 1,625 rooms.

Also posting big employment declines were the Irvine Marriott, down 20% to 340. The Embassy Suites Orange County Airport North in Santa Ana and Holiday Inn Anaheim at the Park both cut their ranks by 19%.

The biggest gain in employment was at the Doubletree Hotel Santa Ana/Orange County Airport, which grew its staff 18% to 130.

Also gaining: Laguna Cliffs Marriott, up 16% to 370; and the Sheraton Anaheim, up 14% to 285.

Marsha Hansen, general manager of the Doubletree Santa Ana, attributed the increase to the addition of banquet staff. �We really got busy in the last few months,� she said.

Twelve of OC�s 34 cities have hotels among the largest 50, but Anaheim continues to lose market share with the addition of larger hotels along the coast.

This year, Anaheim has 16 hotels on the list with a total of 8,643 rooms�41% of the total rooms. Six of the largest 10 hotels also are in the city. Last year, Anaheim�s share was 43%; prior to 2000, the city dominated with more than half the room count.

Garden Grove bumped its share of hotels on the list to four with the opening of the Marriott Suites. Those hotels account for 1,784 of the total rooms�8.5% of the total. All are within one mile of the Anaheim Convention Center.

Newport Beach�long the bridesmaid to Anaheim�has six hotels on the list. Three are on the coast and three are near the airport. In all, the city accounts for 2,308 rooms on this year�s list�11% of the talley.

Irvine and Costa Mesa make up the bulk of the airport market. Irvine has six hotels on the list with a total of 2,190 rooms, while Costa Mesa has five on the list with 1,650 total rooms.

Add in the three Newport hotels in the airport market�Sutton Place, Radisson and Newport Beach Marriott Suites�and the airport area can count 4,864 rooms, or 23% of those at the largest 50 hotels.

Coastal OC got a boost this year with the opening of the Montage and Hyatt Regency. Together, the coastal market accounts for eight hotels on the list and 3,227 rooms, or 15.4% of the total.

The largest hotels in the county continue to spruce up guest rooms, public areas and meeting space.

The Hilton Costa Mesa completed a $15 million renovation in March that transformed the hotel�s lobby, restaurant and meeting space. Director of sales Beck said the hotel also beefed up its security systems.

The Laguna Cliffs Marriott in Dana Point has been busy putting the finishing touches on its new 14,000-square-foot spa and 32 new guest rooms. The Ritz-Carlton Laguna Niguel plans a $30 million makeover and spa.

The Hyatt Newporter, too, is undergoing a renovation under the direction of new owners, San Clemente-based Sunstone Hotel Investors Inc.

No. 10 Coast Anaheim Hotel began an exterior remodel of the porte cochere last week, and the Doubletree Hotel Anaheim/Orange County finished a renovation of 200 guest rooms; the rest of the rooms will be completed before the end of the year.

Hotel development in OC has slowed with the economy as financing for hotel projects dried up. Sales and remodels likely will dominate the landscape for the next year or two.

For now, hotels in the OC pipeline include a Doubletree in Anaheim, a new boutique resort in the Pacific City development at Huntington Beach, and the recently announced Pelican Hill Inn in Newport Beach by The Irvine Company. None are expected to open before 2005.

Big Changes at Small Hotels

Some business-class hotels get overlooked on the Business Journal list as big new hotels increasingly displace smaller ones.

New business hotels or expansions that aren�t reflected on the list include:

• The 200-room Residence Inn Anaheim, which opened June 30. It includes meeting space for groups of up to 100 as well as kids� suites.
• A 117-room Extended Stay America opened in Yorba Linda in May. Extended Stay caters to the long-term business traveler.
• The 100-room Holiday Inn Express opened in Garden Grove. It has free high-speed Internet access, a business center and 1,400 square feet of meeting space.
• A 90-room expansion is planned at the Ayres Hotel in Mission Viejo. Additions include two-room suites and 1,500 square feet of meeting space.

• The Residence Inn by Marriott in Orange was converted to a Best Value Inn & Suites Anaheim East in February. The 104-room hotel has 1,300 square feet of meeting space.
• Broughton Hospitality Group, which took over management of the 224-room Hotel Huntington Beach early this year, is in the final stages of a $2 million renovation.
• Days Inn Park South near Disneyland was converted to a Comfort Inn Maingate in January.
• The Holiday Inn Santa Ana renovated its meeting space in March.
• Residence Inn Cypress was sold for $19 million to Apple Hospitality in May.
• The Surf & Sand in Laguna Beach debuted a remodel of its two-year-old spa, Aquaterra. A nail salon and more retail shops are expected later this year.
• Holiday Inn Anaheim Resort added 20 kids� suites with their own TV/VCRs, Nintendo and bunk beds.
• Courtyard by Marriott in Laguna Hills just completed a renovation of all its rooms and public spaces at the 136-room hotel.

Sandi Cain is a freelance writer and contributor to the Orange County Business Journal and meetings industry publications. She specializes in hospitality, tourism and travel. 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.