San Diego’s hospitality industry is betting its bottom dollar that the sun will come out tomorrow — and stay out. A somewhat weaker U.S. economic outlook is tempering that optimism, but isn’t turning blue skies gray.
Tourism numbers expected to peak in summer 2013
According to Tourism Economics June 2012 Quarterly Travel Forecast, the number of visitors to San Diego continues to grow, but are expected to slow in the second half of 2012. Visitor numbers are forecasted to accelerate and top the 2006 peak of 32.2 million visitors in 2013. In the first half of 2012 visitor expenditures also grew, but spending is expected to slow in line with the visitor forecast.
San Diego’s hotel sector recovery is slightly outpacing that of the nation and most other major metro area markets. Rooms sold through April were up 4.8 percent versus the national average of 3.4 percent. This growth rate ranks first among key markets in California and eighth out of the top 25 markets nationally. Occupancy rates are expected to reach 71 percent this year due to constrained supply, which bodes well for hotel renovations, expansions and new-build projects around the county.
Busy time for hotels
Hilton Carlsbad Oceanfront Resort & Spa, developed by Wave Crest Oceanfront LLC, opened June 21. According to Lodging Econometrics, it’s the West Coast’s only major new-build resort and meeting venue coming on line this year. Situated on 800 feet of oceanfront opposite Ponto Beach, the Hilton employs a staff of 200. Built by Soltek Pacific Construction, it features 215 guest rooms, fine dining, an oceanfront pool and 25,000 square feet of meeting space.
Close on the Hilton’s heels, the 150-room Vista Hyatt Place, developed by San Francisco-based ABA Development LLC and managed by Rim Hospitality, opened July 10.
Further down the pipeline, construction on the recently approved six-story, $40 million Fat City dual hotel complex being developed by CLJ Partners and Jonathan Segal is expected to start in early 2013. In Oceanside, GF Real Estate received approval to build its Spring Hill Suites Marriot, a 150-room $30-$40 million seaside luxury resort. Part of a nine-block development plan that includes the Wyndham Oceanside Pier Resort built in 2008, the resort is slated to be operational by fall 2013. Bartell Hotels’ $13 million, 44,000-square-foot expansion of its Holiday Inn San Diego Bayside broke ground in June. When completed in summer 2013, the hotel will have a new grand entrance lobby, 291 rooms, 8,200 square feet of meeting space and employ approximately 50 additional staff.
In the planning stages and not yet approved by the Rincon San Luiseno Band of Mission Indians, a proposed plan to expand Harrah’s Rincon Casino will add a 21-story, 402-room hotel tower, a 23,285-square-foot multipurpose room, a night club, and expanded gaming, restaurant and parking facilities.
W San Diego completed a $4 million renovation in May that revamped the rooftop bar and Living Room, expanded its meeting rooms, and debuted its Latin-influenced restaurant, Kelvin. The hotel’s administrative offices were renovated with furniture from Unisource Solutions, Inc., one of Southern California’s leading furniture management and facilities services.
Pebbelbrook Hotel Trust recently spent $25 million renovating the Westin Gaslamp Quarter, debuting the company's new look for its properties worldwide. Each of the hotel's 450 suites were redesigned with eco-friendly materials, and a 5,940-square foot ballroom and adjoining terrace were added on the fourth floor. The exterior received a facelift as well: The aging blue dolphin fountain at the hotel's entrance was replaced with a modern, 40-foot sculpture by local artist Michael Stutz, "Flame Flower." The company also opened Pinzimini, its new signature Italian restaurant, marking its third location in the United States.
Retail market sees ups and downs
As the first industry to feel changes in consumer attitudes about the economy, retailers will keep a keen eye on economic indicators and inventory levels as back-to-school shopping, the second biggest time of the year, approaches. According to the National Retail Federation’s May retails sales report issued June 13, May retail sales decreased 0.3 percent seasonally adjusted from April, but increased 4.8 percent unadjusted year-over-year, marking 23 consecutive months of growth. Other report findings indicate unadjusted year-over-year retail sales are up across all sectors: Clothing and accessories are up 7.3 percent; sporting goods, hobby, book and music store sales up 9.1 percent; health and personal care up 3.1 percent; and furniture and home furnishings up 11.4 percent.
Unisource Solutions has benefited from increased activity in the hospitality industry including furnishing the Westin’s back office renovation, and the new San Diego Convention and Visitors Bureau (ConVis) offices. Its largest project this year is the new Palomar Pomerado Hospital. Unisource San Diego President Anne Benge said business is up this year, and she anticipates a strong second half in spite of a generally weak office furniture market.
Business at Innovative Commercial Environments (ICE) has increased 60 percent this year, in part due to large orders from the U.S. Border Patrol and California State University, San Marcos according to president DeLinda Forsythe. An independent contract furniture dealership, ICE recently furnished Hobie Cat’s offices and the administrative offices of Rancho Valencia Resort & Spa as part of a $20 million, resort-wide renovation.
Major enhancements are being made to the 45-acre property’s guest room suites and 5,000-square-foot hacienda. Other updates include a new Mediterranean–style restaurant and cantina-style bar, an additional 1,000-square-foot meeting room, and expansions to the ballroom and spa. Renovations should be finished by the start of Del Mar racing season.