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Hotel building booms in North County

Several new properties, projects under way

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Carlsbad and Oceanside could be awash in new hotel rooms within the next couple of years, but city officials don’t seem particularly worried.

Carlsbad, which just saw the opening of WaveCrest Hotels’ 215-room Hilton Carlsbad Oceanfront Resort & Spa on June 21, already has about 3,800 hotel rooms in the city. Carlsbad has identified at least five more hotels that would add another 692 rooms to the total.

One of those projects, a 250-room hotel on the Legoland California property is under construction. That project is slated for completion in the spring of next year.

A 99-room Fairfield Inn on Palomar Oaks Way in the Palomar Oaks Technology Park is likely to be next up, given the Carlsbad Planning Commissioner approved the project last month. Surya L.P. of Scripps Ranch, with Neil Patel of Excel Hotel Group as Surya’s principal, is the developer.

Construction is expected to begin this fall on a 133-room Holiday Inn and a 106-room StayBridge Suites that would both be built by Bakersfield-based Prime Group Construction for the Alps Group Inc. off Palomar Airport Road at Innovation Way.

Sharad Khandwala, CEO and president of Alps Group Inc., who also owns a nearby Hampton Inn and a Holiday Express, said he isn't worried about too many hotels in Carlsbad.

“My Hampton’s Regrets and Denials Report indicates how many requests for rooms are not honored, and this one hotel alone could have sold as many as 251 additional rooms in one night during this month," Khandwala said. "It is not unusual for the hotel to be sold out with an average of over 100 regrets and denials nightly."

Don Neu, Carlsbad city planner, said a 104-room Spring Hill Suites by DKN Hotels of Irvine has been proposed along Carlsbad Boulevard north of Pine Avenue. The new hotel would be built where a 28-room hotel and a small restaurant exist today.

The newly completed Hilton Carlsbad Oceanfront Resort, which has 25,000 square feet of meeting space and a spa among other amenities, is within the 50-acre Ponto Beachfront Vision Plan.

“There could be more hotels in the Ponto area southeast of the Hilton,” Neu said.

Neu added that there are multiple properties elsewhere within the city’s land use plan that might allow for hotels.

“These are under a travel/recreation/commercial designation,” Neu said.

Given the surplus of hotels that may already exist, developers and their lenders may balk at planning more in Carlsbad.

Carlsbad has hotel occupancies that are either middling or very strong depending on the time of year. Kathy Dodson, Carlsbad economic development manager, said that April’s occupancy rate — the most recent the city had available — was 65.7 percent, a modest improvement over the prior year.

“During the summer months we usually see our highest occupancy rates, which peaked in the mid 80 percent range last July — the highest peak in over five years,” Dodson said.

Dodson said over the past 12 months, Carlsbad’s Transient Occupancy Tax revenue has increased by 10.9 percent over the prior 12 months, indicating strength in occupancy and rates.

A newly-opened hotel just over Carlsbad’s municipal border in Vista is the 150-room Hyatt Place Hotel property developed by Rim Hospitality, which is located close to both the Vista and the Carlsbad business parks as well as McClellan-Palomar Airport.

Oceanside is also expecting its own 127-room Hyatt Place hotel on the site of the old Bridge Motor Inn, assuming developer Shantu Patel can obtain the necessary financing.

“That entitled project will have 3,000 square feet of retail including a restaurant and 24 condominiums,” said Tracey Bohlen, Oceanside economic development manager.

Bohlen noted that what could be called the largest project on the drawing board in Oceanside is actually three Hilton (NYSE: HLT) brand hotels totaling 426 rooms, called the Inns at Buena Vista Creek at the southeast corner of Jefferson Street and Highway 78.

The Sunterra Development project is proposed to be flagged by Embassy Suites, Homewood Inn & Suites and Hampton Inn & Suites, and will have a combined 10,000 square feet of meeting space, an outdoor pavilion and a four-level parking structure.

Developing multiple hotels rather than a single large one has already happened at Liberty Station in Point Loma, and has been proposed in the revised Lane Field plan in the North Embarcadero area as well.

Meanwhile, developing what had been proposed as a 400-room resort hotel next to the Oceanside Pier has proven to be elusive. Developer and now UT- San Diego publisher Douglas Manchester’s proposal conceived in the late 1990s was deemed too massive for the waterfront. SD Malkin Properties later took up the reins of the plan, but ran into the recession.

Jeremy Cohen, an SD Malkin senior vice president, said while the project as it stood was fully entitled by the city, the dismantling of the state’s redevelopment agencies has made it a more difficult proposition.

“No one expected a court ruling that looked like it came out of the Spanish Inquisition, but that’s what we got,” Cohen said, adding that the financing had already been lined up before redevelopment agencies were forced to disappear within the past few months.

If and when the Oceanside resort project does get going, Cohen said it will be a slightly smaller 360 rooms and will likely be constructed in two phases.

As long-term projects continue to be evaluated, at least one Oceanside hotel project is poised to begin coming out of the ground this fall. GF Development Group, the development arm of the Southern Ute Indian Tribe of Durango, Colo., has proposed a 150-room SpringHill Suites hotel on the southwest corner of Seagaze Drive and Myers Street.

Bohlen said the project, which will feature a 4,500-square-foot Sage Restaurant Group eatery and underground parking, is expected to be completed in 18 months to two years.

A couple of hotels of an as-yet undetermined size could be constructed along the perimeter of Oceanside’s El Corazon property that for many decades was used for sand mining, but a timetable for these has not been set.

Sudberry Properties, developer of the Civita masterplan at the northern edge of Mission Valley, is planning El Corazon as well.

When asked if too many hotels are being constructed in Oceanside as well as Carlsbad, Bohlen didn’t seem too worried.

“It’s not a concern of mine. Most of our hotels are motor inns,” Bohlen said.

In the meantime, Bohlen said the El Corazon property will be home to the Surf Cup youth soccer championships, which in turn will fuel the demand for more hotel rooms.

“We will see a huge uptick in sporting events,” Bohlen said. “We will lose out if we don’t get more rooms.”

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