The start of construction on the Ritz-Carlton La Jolla Conference Resort is now five months behind schedule, but a project spokesman said worsening hotel market conditions have not played a role in the delay of the $59-million development.
Spokesman John O'Brien said financing problems encountered by the project's Japanese owner are responsible for the delay, but that a loan for the 210-room project is "imminent." He declined to discuss details, including which Japanese bank or lender may make the loan.
"We are just waiting final approval of a construction loan. Things are still going forward. The construction loan will be made by a Japanese bank. It's just taking a little longer than we anticipated," O'Brien said.
O'Brien's firm, the Flagship Group, has a minority interest in the Ritz-Carlton development team headed by Chiemori La Jolla, the U.S.-based unit of a Japanese real estate development and investment firm.
The 9.5-acre project is on North Torrey Pines Road, west of the UC San Diego campus, on the site of a former horse farm and stables. The project will include meeting and convention facilities.
Next to the hotel site is the 121-unit Blackhorse luxury townhouse condominium project also co-developed by O'Brien's company. All 121 units costing up to $600,000 each have been sold, he said.
O'Brien said preparation of the hotel site has begun, including work on a drainage system and a cross street, and that all improvements thus far have been paid for out of equity funds advanced by the developers.
The hotel market in San Diego overall and in the La Jolla-University Town Center area in particular has softened considerably over the last two years. Over that period, a 400-room Hyatt Regency and a 400-room Sheraton hotel have opened within 2 miles of the Ritz-Carlton site.
Because of a hotel construction glut and a slowdown in visitor traffic, the average occupancy rate in San Diego County hotels last year fell to 64%, down from 67% in 1989, said Scott Smith, manager of real estate consulting services at Pannell Kerr Forster's downtown San Diego office.