United States -  Anaheim - Santa Ana

Attracting over 20 million leisure visitors per year, the Anaheim/Santa Ana hotel market (defined as Orange County, California) is home to an array of leisure attractions, but Orange County also supports a diverse base of industries and sectors, including technology, finance, manufacturing, education, and healthcare. Within Orange County, there are a variety of hotel submarkets ranging from the cities of Orange, Garden Grove, and Anaheim (which surround the Disney theme parks) and Buena Park (home of Knott's Berry Farm) to Irvine (University of California Irvine campus and base for numerous corporate headquarters) and the affluent coastal communities of Huntington Beach and Dana Point. Each submarket has its own unique set of demand drivers, and the Orange County market has recorded robust demand growth over the last several years. Market-wide occupancy exceeded 78% in 2016, declining less than 0.5% from the prior year because of supply increases and strong ADR growth. Average rate surpassed $150 in 2016, increasing 4.7% over 2015, and resulted in peak RevPAR performance of nearly $118.

While overall occupancy declined because of the addition of eight hotels in the market, demand increased by 2.3%. Disneyland’s 60th anniversary and the return of luxury leisure business to the coastal cities contributed to the market’s improvement. Additionally, strong corporate demand in commercial centers, such as Irvine, boosted overall demand performance. Looking forward, operators are anticipating further declines in occupancy in 2017, as additional new supply enters the market and Disney theme park attendance declines somewhat following the end of Disneyland's 60th Anniversary. Occupancy is anticipated to recover in 2018 and 2019 following the expansion at the Anaheim Convention Center and the addition of Star Wars Land at the Disneyland theme park. With new attractions expected to induce visitation at Disney theme parks, a strong citywide convention calendar, and a consistent base of corporate business, occupancy is forecast to surpass prior peak levels, and ADR growth is anticipated to continue at a strong pace.

Positive trends in key performance indicators and anticipated demand growth have prompted a surge in new hotel development, particularly in Anaheim, Garden Grove, Irvine, and Huntington Beach. Most of the new supply is concentrated in Anaheim and Garden Grove, including the 603-room Great Wolf Lodge Southern California that opened in February 2016. Hotels currently under construction include the 250-room Marriott Irvine Spectrum Market, scheduled to open November 2017, and the 350-room Cambria Suites Anaheim. With supply entering the market, positive expectations for RevPAR growth, and a modest increase in capitalization rates, Anaheim/Santa Ana hotel values are forecast to remain relatively stable in the near term.

Hotel transaction volume was robust in 2016 due to hotel investors focusing on coastal resort hotels and assets near the market's main demand generator, Disneyland. Hotel inventory in Orange County ranges from owner-operated budget motels to luxury resorts in the coastal communities. Given the breadth of product offerings, the pricing of recent Orange County sales has varied tremendously. However, the most notable sale was the 393-room Ritz-Carlton Laguna Niguel Dana Point, which sold in March 2016 for $366 million, or roughly $931,500 per room; other notable sales in 2016 included the Hilton Irvine Orange County in September at $80 million and the Holiday Inn Laguna Beach in April. Thus far in 2017, eight hotels have transacted, including the Embassy Suites Orange County, which sold in May for $42 million ($184,000 per room) and the $125-million transaction of the Duke Hotel Newport Beach in February. The outlook for the Anaheim/Santa Ana market is positive due to anticipated high-quality hotels entering the market, visitation expectations for the Disney theme parks, the strong base of corporate demand, and favorable economic conditions throughout Southern California.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Anaheim - Santa Ana RevPAR Change

Anaheim - Santa Ana RevPAR

Year RevPAR
2006 81.53
2007 87.68
2008 83.78
2009 69.18
2010 73.40
2011 80.36
2012 87.98
2013 95.05
2014 103.97
2015 113.46
2016 117.93
2017 (f) 122.03
2018 (f) 126.95
2019 (f) 132.69

For more information, please contact:

Jessica White
jwhite@hvs.com
  • +1 424 208-1262 (w)
Li Chen, MAI
lchen@hvs.com
  • +1 310 755-8293 (w)
Greg Mendell
gamendell@hvs.com
  • +1 203 561-6094 (w)