The number of hotel openings in California grew during the first half of the year, and a large part of that is thanks to one hotel.
Atlas Hospitality Group’s California Hotel Development Survey 2025 Mid-Year reports that 36 hotels opened during the first six months of 2025, a 64% year-over-year increase. The number of new rooms added during that time was 5,369, up 135% compared to last year.
Of those rooms, 1,600 came from the Gaylord Pacific Resort & Convention Center that opened in May in Chula Vista. This property alone accounted for 52% of the 135% increase of new rooms added year over year.
The Gaylord property is the biggest hotel to open in California in 33 years, Atlas President Alan Reay said.
“I think that in itself speaks volumes about people’s desire, and perhaps even more so the city’s desires to help fund that kind of project,” he said.
While the Gaylord opening certainly boosted the numbers, it’s not the only reason the state saw year-over-year increases in both hotel and room count openings. Without it, there were still another 35 hotels with 3,769 rooms that opened in the first half of 2025 compared to 22 hotels with 2,289 rooms in the first half of 2024.
The numbers drop from here. The Atlas survey found the number of hotels under construction dropped from 123 to 99, a 19.5% year-over-year decrease, and the number of rooms under construction fell from 15,542 to 12,213, a 21% decrease. The number of rooms in the planning stage have also fallen, dropping from 158,402 in 2024 to 147,648.
Through decades in planning, construction of the Gaylord took less than three years. The average construction time for a normal-sized select- or limited-service hotel in California is about 18 to 24 months, Reay said. This construction time has been elevated in recent years following the pandemic and the related supply chain interruptions.
Those construction times, along with higher construction costs, aren’t expected to come down any time soon now that there are new tariffs in place as well as a clampdown on illegal immigrant labor, he said.
“As we’ll see from our sales survey coming out, there’s a lot of properties now that are trading at levels well below replacement costs,” he said. “New development tracks when prices of existing product go up above replacement cost, it makes sense to build, and we’re in that sort of in between market right now.”
California lawmakers rolled back the state’s California Environmental Quality Act earlier this month to remove some roadblocks to new development in hopes of helping ease the severe housing shortage there.
While the loosening in some restrictions and requirements for new development could help, that alone won’t be enough to spur hotel development in the state, Reay said. Developers still have to contend with the higher cost of financing and construction materials as well as the cost and availability of construction labor.
For a three-story limited-service hotel with ground-level parking, the cost used to be about $100,000 a key, he said. Now the cost in California is closer to $250,000 to $300,000 a key.
San Diego will see a big office-to-hotel conversion open as a developer intends to convert the vacant 25-story Tower 180 office building into a 560-key hotel with the Hyatt Place and Hyatt House flags. The redevelopment project comes with a $250 million price tag.
Reay said this project is one of the first he’s seen come this far because the cost and complexity of these projects make them hard to pencil. Many clients who consider buying an office to convert are wowed by the price per square foot to acquire the property but then balk at the price to do the redevelopment work.