By Sandi Cain 
Staff Reporter Orange County Business Journal
May 2002

May 13, 2002 - Orange County hoteliers hope for a solid summer season to regain business the tourism industry lost after last fall�s terrorist attacks and a sluggish economy. 

Occupancy gains early last year from the Anaheim Convention Center expansion and opening of Disney�s California Adventure quickly evaporated after Sept. 11. 

Visitor numbers have been slowly creeping up, but the occupancy rate at the county�s largest hotels dropped last year for the first time since 1998, according to the Business Journal�s list of hotels, which are ranked by number of rooms.

Employment at the 46 hotels in operation for the past two years was down 5% to 13,246, while the average room rate in the county crept up 3% to $151. The 50 largest hotels on this year�s Business Journal list had 14,601 workers�3% more than the 50 hotels on last year�s list. That gain reflects the higher staffs at new hotels on this year�s list that bumped smaller lodgings off. The four new hotels reported a total of 1,355 employees, while the four that dropped off the list had a total of 332 employees last year.

The total room count grew 8% to 20,446 with the addition of the four new hotels. 

Newport Beach-based Makar Properties LLC�s St. Regis Monarch Beach Resort & Spa makes its debut on the list at No. 17, while Newport Beach based Landmark Hotels LLC.�s Embassy Suites Hotel Anaheim-South in Garden Grove enters at No. 21. New at No. 38 is the Holiday Inn Anaheim Resort Area, built by Irvine-based R.D. Olson Construction, and at No. 39 is Irvine based Imperial Hotel Group�s Doubletree Hotel Santa Ana/OC Airport.

The county gained more than 200 suites at the largest hotels, most of which are in No.5 Hyatt Regency Orange County�s new tower.

Repeating the pattern of recent years, hotels needed more rooms to make the list this year. The 230-room Holiday Inn Costa Mesa and Hilton Suites Anaheim/Orange share the last spot on this year�s list. Last year, the 222-room Embassy Suites Hotel Anaheim North ranked No. 50. The 200-room barrier was reached in 2000.

Hotels with fewer than 230 rooms that dropped from the list this year were Embassy Suites Brea, Fullerton Marriott, Hotel Huntington Beach and Embassy Suites Hotel Anaheim North.

Of the 46 hotels open both years, 27 reported occupancy rates averaging 68%, down from 74% they reported a year ago. 

Countywide occupancy�which includes a broader range of hotels and motels of all sizes�was at 59% in February, the most recent month for which figures are available. Nationwide, the February occupancy rate was 55%, according to Hendersonville, Tenn.-based Smith Travel Research.

�Bookings are following about what you�d expect, but business travel is still down (since Sept. 11),� said Doug Watson, general manager of No. 2 Anaheim Marriott. �I don�t think our industry will ever be the same,� he said.

Industry projections suggest that summer travel will boost hotel performance, but the high occupancies seen in 2000 are unlikely to be reached for some time. An April forecast from Ernst & Young�s Hospitality Group projected nationwide occupancy is likely to be a �soft but stable 59.9%� through early 2003.

Jim Abrams, executive director of Sacramento-based California Hotel & Lodging Association, said strong numbers were posted statewide in March and April, but that summer was still looking soft. �Leisure areas like Orange County should do better than business areas,� he said.

Some hoteliers agree.

Edd Karlan, director of sales at the Hilton Anaheim, Southern California�s largest hotel at 1,572 rooms, said he�s optimistic. �We expect a 3% to 5% increase in business this summer,� he said. 

But hotels can no longer count on long lead times for either leisure or business bookings. Most hoteliers and industry analysts contacted for this story said the booking window is shorter than it�s ever been.

�Easter looked bad until the weekend before,� said Bill Cleaver, general manager of the leisure-dependent Howard Johnson�s in Anaheim.

Bill Gunderson, general manager of the Newport Beach Marriott & Tennis Club--a hotel that relies heavily on regional business and weekend travel--said in recent weeks there have been as many as 40 or 50 walk-ins asking for rooms for Saturday nights. �That�s unheard of at full-service hotels,� Gunderson said. 

Of the 42 hotels in operation both years that reported employment, 10 increased their numbers, 17 had fewer employees and 15 had no change. 

The biggest reduction in employees was at No. 28 Radisson Hotel Maingate in Anaheim, which saw its ranks thinned by 30% to 110. Suzann Collins, director of sales, attributed the drop to the effects of Sept. 11.

Next hardest-hit was No. 45 Newport Beach Marriott Suites, which dropped 25% to 100 employees.

Marriott Suites general manager Debbie Golanka said good spring business has leveled off in recent weeks. �We�re all nervous about summer,� she said.

The biggest gain in employment was the result of expansion. The Hyatt Regency Orange County, which jumped to No. 5 on the list from No. 16 last year, saw its ranks increase by 60% to 400 with the hotel�s expansion to 654 rooms from 396 last year. The hotel also roughly doubled its meeting space in the makeover. 

Eleven of OC�s 34 cities have hotels among the largest 50. Anaheim continues to dominate the landscape, with 43% of total rooms and 42% of hotel employment. In all, Anaheim has seven of the largest 10 hotels on the list and 17 in total. 

The next-closest cities in hotel count are Costa Mesa, Irvine and Newport Beach, which have six hotels each. Other cities represented include Dana Point and Garden Grove with three each, Buena Park, Fullerton, Orange and Santa Ana with two each and Huntington Beach with one. Brea lost its lone entry when its Embassy Suites dropped from the list this year. 

With a softer tourist market on the horizon and financing for new hotels or expansions almost nonexistent, some hotels are looking to renovations to stay current in the market. 

The biggest makeovers completed in the past year were at the Hyatt Regency Orange County in Garden Grove, the Anaheim Marriott and No. 31 Four Seasons in Newport Beach.

The Hyatt completed its $40 million expansion and renovation in March, adding a 258-room tower with 87 kid�s suites and increasing the hotel�s function space to 65,000 square feet. 

The Anaheim Marriott completed a $25 million renovation of the lobby, pool areas and port cochere in January, adding two water features and new landscaping to the front of the property.

In March, the Four Seasons completed a three-year, $15 million improvement program that included guest rooms, expanded meeting space, restaurants and pool areas.

Other hotels that got a facelift in the past year were the Westin South Coast Plaza, Country Inn & Suites in Costa Mesa, Hyatt Newporter, and Costa Mesa�s Wyndham Garden. The Embassy Suites Santa Ana will complete its $1.2 million remake this month and Sutton Place in Newport Beach will complete its transformation to a wireless facility by summer�s end. Forty of the hotels on the list now offer high-speed Internet access at least in meeting rooms. 

Upcoming remodels include the Hilton Costa Mesa, which will spend $14 million to redo its guest rooms, restaurant and lounge and meeting space, and the Hyatt Regency Irvine, which will begin a $16 million upgrade in August that will result in more meeting space and a new look for guest rooms. 

The Ritz Carlton Laguna Niguel recently announced a $30 million renovation to begin in the first quarter of 2003 that will include guest room updates and an expansion of the fitness and massage center.

Management turnovers were rampant in the past year, even for an industry known to move its employees around. The biggest change on this front comes at the three Disneyland Resort properties, where Tony Bruno was appointed general manager of all three resort hotels earlier this month. Bruno was most recently general manager at the new Grand Californian and previously managed Disney�s Paradise Pier Hotel (then called Disney Pacific). Assistant managers were named at all three hotels to carry out day-to-day management.

�The important thing for us was for all the hotels to have a unified voice and one leader,� said Randy Baumberger, senior vice president of Disneyland Resort hotels and Downtown Disney. 

�Hotels need constant leadership with one vision and direction,� he said. A similar move was made on the sales side a few years ago. Today, Joann Delgin is director of sales for all three hotels. 

Rod Schinnerer, general manager at the Disneyland Hotel for 5-1/2 years, was named general manager for Downtown Disney.

In all, there were 21 changes at the general manager or director of sales positions among the 46 hotels that appear on both the 2001 and 2002 lists.

Ownership changes--common a few years ago--were minimal this time around with the biggest change at No. 12 Hilton Costa Mesa, where Hilton Hotels sold a majority interest in the property to Orlando-based CNL Financial Group Inc.

The only other notable change was at the Anaheim Plaza & Suites across from Disneyland, which joined the ranks of the Vagabond chain last September, only to lose its franchise designation earlier this year. The hotel sits on an 8.7-acre parcel of land whose ownership is the subject of a lawsuit.
 
 

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.