With the opening of the hugely expanded Manchester Grand Hyatt
earlier this month, San Diego is now home to the state’s
second-largest hotel in terms of rooms, and the tallest on the West
The massive, 1,625-room Manchester Grand is only the most recent
addition to San Diego County’s booming hotel industry. At least
seven more hotels are under construction or soon to begin building,
with four more in the early planning stages.
Analysts say the San Diego lodging market has become one of the
strongest in the country, despite a gloomy outlook for the
nationwide hotel market.
After two years of decline in the U.S. lodging market, the first
half of 2003 brought more challenges with war, SARS and dampened
While California’s lodging market has generally fared better
than the rest of the nation, San Diego stands out as the state’s
top-performing city, according to Ernst & Young’s California
Mid-Year Lodging Report.
Average revenue per available room for the first half of the
year was $76.06 in San Diego, compared with $58.59 statewide and
$48.70 for the United States, according to the report.
And though the city’s occupancy rates were relatively flat
earlier in the year, in July, which is typically high season, San
Diego had the highest hotel occupancy rate of any city in the top
25 markets across the country, according to Smith Travel
San Diego’s occupancy rate of 85.3 percent in July was up about
3 percent over the same time last year, and far exceeded the
national average of 69.5 percent that month.
During the first half of the year, San Diego saw the number of
visitors increase by 3 percent over the same period last year.
San Diego’s success can be attributed in part to the general
trend of American travelers to stay closer to home, said Kerri
Kapich, vice president of marketing for the San Diego Convention
and Visitors Bureau.
The city is an easy drive for leisure travelers from Los Angeles
and Orange County in California, as well as Arizona and Nevada, and
marketing efforts have focused on cities within a three-hour
flight, such as Seattle, Las Vegas and Dallas.
“But we haven’t put all our eggs in one basket,” said Kapich.
San Diego has also enjoyed a healthy growth in meetings and
In 2001, the San Diego Convention Center almost doubled its
meeting space with a $216 million expansion. Operating at 63
percent capacity, according to Ernst & Young, there is already
talk of further expanding the convention center by 2008.
Next door, a new ballpark for the San Diego Padres baseball team
is also scheduled to open in the spring. With that project comes a
new 32-story Omni Hotel, which will connect to the new ballpark via
a sky bridge.
The Omni is being developed in partnership with JMI Realty of
San Diego, which is owned by John Moores, who also owns the
The 511-room hotel, with views of the city, bay or ballpark,
will have 20,000-square feet of meeting space, a fitness club, and
free high-speed wireless Internet access. And the Omni will be
filled with sports memorabilia from Moores’ private collection,
with items such as a pair of Joe DiMaggio’s shoes.
Meanwhile, Marriott International has approved the development
of a Renaissance Hotel in downtown San Diego. Company officials
said they hope to have a management contract signed by the end of
The first phase of a Staybridge Suites is scheduled to open in
December with 68 suites. The hotel, in a renovated historic
building in Balboa Park, will have a total of 180 rooms. The
primary owner is Shapery Enterprises in San Diego. Kimpton Hotels
& Restaurants is also expected to begin construction on a new
hotel in downtown early next year.
And construction was scheduled to begin before the end of the
year on a 180-room hotel called The Diegan, as part of a project
that also includes a House of Blues music venue.
Donna Alm, vice president of marketing for San Diego’s Centre
City Development Corp., estimates that, starting with the 7,224
rooms available downtown in 2000, the city could potentially see
the number of hotel rooms increase by nearly 75 percent to around
12,500 within the next two or three years.
Alm’s estimate includes several projects in the early planning
stages, such as a proposed Hilton Hotel adjacent to the convention
center, and the Spinnaker Hotel proposed at the Port of San
Analyst Bruce Baltin, senior vice president for PKF Consulting
in Los Angeles, predicts the growth will be more gradual. But he
said conditions are certainly favorable for more new hotels in San
Baltin predicted the high occupancy rate would continue into
August, but room rates, which have increased only slightly from an
average of $110 in July 2002 to $114 this July, will likely hold
“They still have to compete with other markets that are price
competitive,” said Baltin.
Outside the downtown area, Huntington Hospitality Group, based
in Irving, Texas, is building a Residence Inn franchise in the
Scripps Ranch area of north San Diego County with 95 rooms, which
is scheduled to open this week.
In La Jolla, Lowe Enterprises is developing the 210-room
Estancia La Jolla Hotel & Spa, a conference center facility
next to the University of California, San Diego. Scheduled to open
in March 2004, the Estancia will be managed by Destination Hotels
& Resorts, a Lowe subsidiary, which also operates San Diego’s
beloved Hotel del Coronado.
On Tuesday, Pala Casino’s $105 million resort and spa
(www.palacasino. com) is scheduled to officially open just south of
the Temecula wine region. The 10-story hotel, which adjoins the
casino built in 2001, will have 507 rooms, a 10,000-square-foot
spa, and 30,000 square feet of meeting space.
The casino and resort are owned by the Pala Band of Mission
Indians, and the property is being developed and managed by Jerome
Turk, CEO of Turk Pala Management.