Hotels Rising in Antelope Valley

The latest sign that the Great Recession has ended in the Antelope Valley comes in a rush to build new hotels. A wave of hospitality development that began in 2011 shows no sign of slowing down. Two hotels are slated to open in Palmdale next year, and the recent purchase of two properties for $1.44 million by Encino-based Land Developers & Associates promises at least one more after that. Company President Daniel Singh intends to build a joint hotel and conference center at Avenue P-4 and Fifth Street West, where a similar project was proposed 10 years ago. “Antelope Valley has half a million people, but no conference center,” said Phillip Terry with Keller Williams, who brokered the deal. “Hotels are certainly needed, and a conference center is certainly needed.” Despite several new hotels opening in the Antelope Valley in recent years, the demand for rooms still outpaces supply, especially in light of Northrop Grumman Corp.’s new contract with the Air Force to build a long-range strike bomber. Although the project remains classified, experts believe much of the work will occur at Northrop’s Palmdale plant. Shanny Goben, sales manager at the Marriott TownePlace Suites in Lancaster, confirmed that business is strong. “Occupancy ranges from 85 to 90 percent during the week,” she said. “With the government at your back door, there’s always something going on.” Rates like that make it easy to see why developers are eager to build, a fact that doesn’t escape the hoteliers already operating. When asked if the TownePlace Suites is on the lookout for competition, Goben had a one-word answer. “Always,” she said. 2017 openings Hotels in the Antelope Valley tend to be midscale or select-service properties, with some amenities like complimentary breakfasts and fitness rooms but lacking conference rooms and banquet halls. Many of them, including TownePlace Suites, are designed to accommodate guests for 10 nights or longer. These “extended-stay” hotels are suited to the region, as temporary workers make up a significant portion of the Antelope Valley’s labor force. “A lot of people come here for (contract) jobs, but they live elsewhere,” Kimberly Maevers, chief executive of the Greater Antelope Valley Economic Alliance, said. “So extended-stay hotels serve an important purpose.” In addition to the TownePlace Suites, which opened in 2014, the recent development boom has brought an Embassy Suites to the region, along with a Best Western Plus. The Holiday Inn Express in Lancaster re-opened in 2013 after extensive renovations. The hotels scheduled to open next year, a Home2 Suites by Hilton and an Element by Westin, are both extended-stay properties that include community workspaces. Together, they will account for 216 new rooms. “Adding new hotel rooms is great for us, because the city benefits from bed taxes,” said Maevers. More hotels also mean more space for another clientele about whom Maevers is especially excited: Tourists. “When you get to see hotels and motels being built, that’s a huge accolade to the hospitality and tourism activity going on across the region,” Maevers explained. “We have sports tournaments happening here every weekend, and all those families need a place to stay.” The new conference center proposed by Land Developers will drive even more tourism to the region, as convention attendees venture outside their hotels to explore Palmdale and other local cities. The 10,000-square-foot center would accommodate up to 800 people, with the option to expand based on demand. Palmdale City Manager Jim Purtee said the hotel on the site will be a “new product” for the area. “(Singh) is seeing the price appreciation and so forth, has done his due diligence, and seems to see this area as an opportunity,” Purtee said. “With two hotels already under construction and such high occupancy rates, he saw this as a really valuable market.” Saturation point Hotel consultant Alan X. Reay, president of Atlas Hospitality Group in Irvine, agrees with Singh’s assessment. “The market is very strong and healthy – values are at record prices, which is spurring hotel development,” he said. Reay noted that the Antelope Valley, with its wide open spaces and relatively lax business laws, could be viewed as an ideal alternative to building in Los Angeles. “People who were developing downtown and in West L.A. may be looking to the Antelope Valley,” Reay said. “That way, they don’t have to deal with the height restrictions and other factors that make it so difficult to build in L.A.” New hotels that come to the Antelope Valley can expect to charge around $100 to $120 a night, with weekday occupancy rates of about 75 percent, Reay said. He doesn’t expect vacation rental marketplaces such as Airbnb to pose much of a threat, as such competition tends to be isolated to large cities and resorts. “The big challenge here is going to be the risk of overbuilding,” Reay said. “There’s a tremendous amount of available land, but if the supply outpaces the demand, it’s still a problem.” Hotel developers should avoid using Northrop Grumman’s long-range bomber contract as a reason to build in the area, Reay added, but even without it there are ample reasons to feel confident about investing in the region. According to the most recent data from the California Employment Development Department, Palmdale had an unemployment rate of 7 percent in June and Lancaster had 5.8. While those numbers are higher than the 5.2 average for Los Angeles County, both cities have improved from double-digit rates in the last two years. In June 2014, the unemployment rate stood at 10.2 percent in Palmdale and 11.6 percent in Lancaster. “Expansion in the Antelope Valley is similar to what we’re seeing in the Inland Empire,” Reay said. “There’s a lot of growth from an employment standpoint.” Building boom? Hotel development in the Antelope Valley comes as a welcome sign of economic progress following a prolonged recession. Until recently, construction lagged behind other local industries in the recovery, but the hospitality sector could change that. “Commercial and industrial development is bringing in jobs for builders, contractors and suppliers,” Maevers said. “We haven’t seen this sort of boom in construction in quite some time. It’s a nice reverb in our economy.” Though residential development has yet to return to the region in full force, out-of-town guests still offer a nice boost for local businesses. Maevers sees them as an opportunity to show off the best that the Antelope Valley has to offer. “Hospitality development definitely doesn’t hurt – we have some shopping and restaurants, plus there’s lots of cultural things happening across the region,” she said. “So we benefit from making sure we promote our events to visitors.” Long-term, Maevers hopes at least a few of those visitors will decide to stay for good. “We really want to show those who drop by how great it is to live in the area,” she said. “We’d love to have some entrepreneurs come in and decide to open their small businesses here.”