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Empty beds paint picture of economic bust

South Placer hotels have 54 percent occupancy, but plans to create demand in the works
By: Daniel A. Wetter Press Tribune Correspondent
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When the economy was bustling, dozens of hotels were in the planning process, in anticipation of the future demand in south Placer County. But today, close to half of these rooms are sitting empty. In 2006, there were 440,999 rooms sold out of 638,750 room nights available, which translates to a 69 percent occupancy rate, according to David Attaway, the CEO of Placer Valley Tourism. Compare that to last year when 472,285 rooms were sold out of 879,650 available, creating a lower 54 percent occupancy rate. Attaway says six new hotels were built in the past four years in the Roseville, Rocklin, and Lincoln region — and they were likely planned during the construction boom. “The construction of a hotel is a fairly long project: securing the land, design, financing, etcetera,” Attaway said. “So the hotels that were being opened now in 2008 and 2009 and 2010, to a certain degree, were using the data that was available in 2005 and 2006, and a 70 percent occupancy with an average daily rate of over $100 was a very lucrative proposition for a hotel.” Attaway was careful to point out that while there is a lower occupancy rate now, more rooms are being sold than in 2006. Since the hotels were planned years in advance, an economic downturn was not expected. “We have added all this capacity and have not added any demand generators,” Attaway said. According to Attaway, the worst year for the local hotel industry was 2009 when occupancy was at 47 percent. However, no hotels have actually closed due to the recession. Another important number, Attaway said, is the average daily rate. In 2006, the rate was north of $100, now it is around $77, sliding dramatically in 2008 and 2009. Currently, there are 23 hotels in the three-city region, up from 17 in 2006. In 2008, building spiked at three new hotels. Additionally, Attaway says that three or four hotels “backed off” from building when they saw the slump in demand. There are 109,500 room nights available at Thunder Valley Casino and Resort, which is not included in the statistics, but when added altogether, there are almost one million room nights available in the area. Creating a demand for rooms Sporting events can really fill hotel rooms. The Greater Sacramento Softball Association’s Western Nationals fastpitch tournament, which wrapped up Sunday, is estimated to have brought 3,500 visitors, according to GSSA Commissioner Jeff Dubchansky. Placer Valley Tourism is currently looking at new demand generators for hotels, including a new sports complex in either Roseville or Rocklin. “What it would be is a multi-field sports venue, and it’s really geared at amateur tournaments, whether they’re soccer, rugby, lacrosse, softball, baseball,” Attaway said. “We do have a significant portion of that business currently; we just don’t have enough facilities to allow us to capture more and more of that business.” The new complex, designed to attract amateur sports teams, would have seven to 15 long fields (used for soccer, etc.) and four to 12 baseball and softball diamonds. The complex has been studied since 2005, but they are now doing conceptual designs. The new complex would be important for the local hotel industry. “That business is very important because most of it happens on the weekend, which is when our hotels really need to be in demand,” Attaway said. At the same time, the City of Roseville is also planning to build a sports complex. “The city has a sports complex approved within the West Roseville specific plan on the south side of Blue Oaks Boulevard,” said Chris Robles, City of Roseville community development manager. “That facility is planned for and we have revenue mechanisms in place to be collected through our community-wide parks fees.” This outdoor complex would include 10 soccer fields and associated improvements needed to draw amateur soccer teams. Robles says it is unknown when such a complex will be built. “It’s dependent on the absorption of home construction, so apparently based on the current economy it’s going to be some time out,” Robles said. The sports complex planned by Placer Valley Tourism may be coming sooner than the one planned by the city. Attaway says they are focused on bringing their complex to the community. “Things are improving, it’s certainly optimistic, but we need to figure out exactly how to create more demand and that’s really why we’re focused on trying to build a sports complex that would allow us to drive more demand which will drive the impact of the local economy,” Attaway said. Abandoned and burgeoning projects One attempt at driving hotel traffic to Roseville fizzled a few years ago. The city and Kobra Properties were working to bring a new 38,000-square-foot conference center to Roseville. The build was planned for a site off of Gibson Drive adjacent to the Westfield Galleria mall. The 20-acre site would have included two new hotels totaling 500 rooms. One of these hotels was a planned 10-story Embassy Suites according to the City of Roseville Office of Community Development’s “Blue Ribbon Corporate Center Committee Report.” This even prompted the raising of the city’s five-story height limit to a 10-story limit. Kobra Properties went bankrupt in 2008 after crushing debt imploded the company. “The permits and approvals, entitlements for that have since expired,” Robles said. Although there are no plans to build a conference center currently, Robles said it’s not completely out of the question. “I’m not sure what the future will bring, I think certainly anything that is going to add amenities to the city and contribute to the economy are things that we certainly look at,” Robles said. The only future hotel development in Roseville could be from the plan for a new movie theater off of Blue Oaks Boulevard and Washington Boulevard. Cinemark USA, Inc. submitted plans in November for a 52,000-square-foot theater complex as well as a two- or three-story hotel and accompanying office buildings. According to Cinemark developer Don Harton, there are no specific hotels in the plan at this point. “We are talking to a few potential groups but have no specific hotel users at this time,” Harton said. He said the next step is a planning committee meeting in either August or September. According to the city, there were no new permits for hotels requested in 2011.