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San Diego

Hotels Will Score Big During World Series

High occupancy rates and limited supply are driving room prices up. More lodging projects are planned.


SAN DIEGO — Baseball fans, news media and assorted hangers-on attending the World Series here starting today will pay 55% more for lodging than they would have five years ago. They're hitting town at the wrong turn in the hotel development cycle.

No major downtown hotels have been built here since the 875-room Hyatt Regency opened in December 1992.

High occupancy rates (averaging 80%) and tight supply have sent room rates up 13% from a year ago and up 55% since mid-1993.

San Diego's daily room rate stands at $122 so far this year, the 10th-most expensive in the nation. But baseball fans will probably pay more: During Super Bowl week in January, hoteliers routinely tacked on a 25% premium, and that kind of gouging is likely again this week.

The scarcity of rooms will be remedied in short order, according to PKF Consulting of Los Angeles. Downtown projects totaling more than 2,000 rooms, including an 800-room Hyatt tower, have been proposed since June, when voters approved a major expansion of the San Diego Convention Center.

An additional 1,000 hotel rooms have been proposed for a site at the former Naval Training Center, the 500-acre property on San Diego Bay vacated by the military in 1993 as part of the Pentagon's base closure program.

And if voters next month approve a downtown baseball stadium for the Padres, more hotel projects are virtually certain.

San Diego's economy continues on a roll, fully recovered from the post-Cold War blues earlier this decade, when defense cutbacks cost the city 49,000 aerospace jobs, most of them high-paying.

Now there are 1.1 million salaried workers in the county, up 16% from the 1993 trough. Unemployment is 3.9%, lower than the state's 5.7% rate and the nation's 4.4%.

Aerospace jobs may be gone, but they have been replaced by biotechnology, telecommunications, sporting goods and tourism jobs, according to Alan Gin, associate professor of economics at the University of San Diego. Biotechnology employment of 26,000 is twice the number of five years ago, according to Biocom, a San Diego-based trade association.

One barometer of economic health is housing prices, which average $220,000, compared with $207,000 a year ago.

But housing construction permits for the year ended in June totaled 12,000 units, only half the number needed to accommodate the 70,000 bump in population the county expects this year, said Greater San Diego Chamber of Commerce researcher Kelly Cunningham.

Meanwhile, the rental housing market in San Diego County is the tightest in 15 years, with vacancies averaging 1.3% at apartment complexes of 20 units or more. "That's essentially no vacancy at all," Cunningham said.

Among the county's fastest-growing job sectors has been sporting goods manufacturing, especially of golf clubs. The county is home to three of the five biggest golf club makers in the nation: Callaway Golf, Cobra and Taylor Made.

But hard times in Asia and other once-flourishing emerging markets are taking a toll. Carlsbad-based Callaway reported its first quarterly sales decline ever for the three months ended in June and is likely to report another drop Wednesday when third-quarter results are released.

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