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The Real Deal Los Angeles

LA’s hotel boom continues despite rising construction costs: report

Hotel rooms under construction rose 25 percent in first half of year
July 25, 2018 11:15AM

Hotel Indigo (Credit: Gensler)

Hotel development, both in L.A. and across California, remained strong in the first half of the year, fueled by high occupancy rates and profitable revenue streams.

In Los Angeles County, the number of hotel rooms under construction has increased 25 percent year-over-year since January, according to a new semi-annual survey published by Atlas Hospitality Group.

There are currently 37 hotels with 5,631 rooms under construction. That’s a sizable increase from the four hotels that have already opened this year, the Los Angeles Times reported.

The growth spurt comes amid a 25 percent rise in construction costs, Alan Reay, president of Atlas Hospitality, told the LAT. Still, that has yet to deter many developers from flocking to the region, where a notoriously tough permitting process has kept supply low.

The boom is being echoed statewide. In California, 183 hotels with nearly 26,000 rooms are currently under construction, reflecting a roughly 40 percent increase from the same time last year.

Orange and San Diego counties posted some of the largest upticks, rising 100 and 81 percent, respectively, in the first half of the year.

A January report from Atlas Hospitality reported there would be as many as 10,000 new hotel rooms coming online in the next few years. That figures to be a conservative estimate, considering developers had laid out plans to build 33,500 rooms in L.A. alone. [LAT] — Natalie Hoberman