Irvine's Hotel Pipeline Fills Up in New Year

Mark Mueller Orange County Business Journal January 12th, 2014 A hotel development push in Irvine is under way as the city aims to grab a larger slice of Orange County's business and tourism travel. Nearly 800 hotel rooms are under construction or in some stage of development in Irvine, according to city filings.

That's believed to be the most development activity of any city in OC besides Anaheim and Garden Grove, which together have more than 3,000 hotel rooms in the planning stage in the area around Disneyland.

It's also the largest slate of hospitality development Irvine has had in years. There's been no new hotel opening in OC's third-largest city in nearly four years.

“Development is back in a big, big way,” said Alan Reay, president of Irvine-based consultancy Atlas Hospitality Group. “It's the hot ticket [for 2014],” particularly in California.

Plans in the works include projects near John Wayne Airport and the Irvine Spectrum and include a mix of hotels aimed at business travelers, tourists seeking high-end accommodations, and those in-between the two.

The furthest along of the new projects, a 210-room Courtyard by Marriott in the Spectrum, is scheduled to open by November.

The eight-story, 131,667-square-foot project, across the street from the headquarters of Taco Bell Corp., is expected to cost about $50 million. It's being built by Irvine-based R.D. Olson Development, which last year opened the first new hotels seen in Tustin in nearly 15 years.

What appears to be the most expensive project currently proposed—a potential high-end hotel at the Park Place mixed-use campus next to the San Diego (405) Freeway—is so far short on specifics, but industry watchers say there could be some announcements about the project this year.

Early-stage plans for the 180-room hotel were filed with the city last year, and industry sources say land for the project is nearing a sale.

The project's branding hasn't been disclosed. In the late 1990s, a Ritz-Carlton hotel was planned for the site by a prior ownership group of the campus but never built. That plan called for a 15-story, 301-room hotel estimated to cost $85 million.

25% Room Boost

The developments currently in the works would increase Irvine's base of hotel rooms by nearly 25%. Irvine has 14 full-service and select-service hotels with a combined 3,400 rooms, according to data from the Irvine Chamber of Commerce. Rooms in Irvine average daily rates near $120 and have occupancy rates approaching 80%, according to industry data. The Los Angeles office of industry researcher PKF Consulting USA LLC expects the average room rates for the area to grow between 4% and 5% this year. The effort to increase hotel rooms in Irvine comes as the city's existing hotels try to broaden their appeal beyond their core base of business travelers.

Hotels began a new marketing program last month organized by Destination Irvine, that emphasizes dining, family-friendly, shopping and other options in the city.

The push is aimed at improving occupancy rates on weekends, when business from corporate travelers slows.

“We want visitors to experience all that we have in our backyard and take advantage of Irvine's close proximity to the area's beaches and attractions,” said Wendy Haase, director of tourism marketing for the organization.

Still Biz Centric

Several of the new developments in the works in Irvine are expected to still cater to business travelers, despite existing hotels' efforts to grab more traffic from vacationers.

Costa Mesa-based hotel investor S3 Hospitality LLC is moving ahead with grading for a five-story, 170-room Hilton Garden Inn Hotel at the former Irvine headquarters of chipmaker Microsemi Corp.

Builder Lusardi Construction Co. of San Marcos expects the hotel, designed in large part for extended-stay business guests, to open late this year. The site is at 2381 and 2391 Morse Road.

The site, next to the San Diego (405) Freeway, long served as the headquarters of Microsemi, one of Orange County's largest chipmakers. It's just off Von Karman Avenue and about a mile from John Wayne Airport.

S3 Hospitality, which also runs a Holiday Inn Express Hotel & Suites in Costa Mesa, bought the Irvine site last March for a reported $5.4 million, according to CoStar Group Inc. records.

Irvine planning officials last month said they were still reviewing plans for another extended-stay project, a 161-room Homewood Suites Hotel at 17330 Redhill Ave.

  DKN Hotels of Irvine is heading up that project.