Silicon Valley Stocks Dip, But Travel Is Still A Hot Commodity

<B>Silicon Valley Stocks Dip, But Travel Is Still A Hot Commodity</B>

By Judy Jacobs

The economic slowdown may have drastically affected Silicon Valley company stock prices, but it's only put a slight dent in corporate travel patterns. Hotels remain full and a number of hotel projects and expansions are in the works in San Jose and the surrounding area.

"We are still experiencing very strong business travel," said Dan Fenton, president and CEO of the San Jose Convention and Visitors Bureau. "The growth may not be the same level as in years prior--there was huge growth in 1999 and 2000--but because we're in the heart of the Silicon Valley, there will continue to be strong demand."

The demand is so strong, in fact, that many people believe it's impossible to obtain a last-minute hotel room midweek in the Silicon Valley. To help solve this problem, the bureau inaugurated San Jose Concierge, a call center that helps business travelers find rooms. During its two years of existence, the call center booked about 16,000 room nights.

While there's a huge demand for hotel rooms for FIT travelers, there's an equally great need for meeting space, a demand that has prompted a push for an expansion at San Jose's McEnery Convention Center. "We are in the pre-development phase and still have financing issues to deal with," Fenton said. "There's a huge demand for meetings, and we want to align the expansion of the convention center with the needs of the Silicon Valley corporate community. We'll have more high-tech features and more space for smaller meetings."

In the meantime, construction is underway on a new downtown Marriott, two of the city's largest hotels are planning expansions and Joie de Vivre Hotels has opened four boutique hotels in the Silicon Valley.

The 506-room San Jose Marriott is scheduled to open in January 2003 on a site adjacent and connected to the McEnery Convention Center. The hotel will incorporate 16,000 square feet of meeting space of its own, including a 9,000-sq.-ft. ballroom. "We will be a convention center hotel, but we'll also work with companies around the Silicon Valley on corporate FIT rates," said Leif Lendrot, the hotel's director of sales and marketing.

At the same time, the neighboring 541-room Fairmont San Jose is building a 264-room tower addition that will have 20,000 square feet of meeting space. The additional rooms and meeting space is desperately needed, according to Jim Rebosio, the hotel's director of sales and marketing. "If we've had any problem from a hotel standpoint, it is that we couldn't meet the demand," Rebosio said. "Now we'll be able to accommodate more FIT business travelers, many of whom have had to be turned away in the past. The expansion also will create space for meetings booked on a short-term basis--sometimes only six weeks to three months out--mostly by high-tech companies. Now we have to say no to a lot of short-term business because of limited space." The 512-room San Jose Hyatt, located near San Jose International Airport, has plans to build a 500- to 700-room tower that will be operated as a separate hotel and is expected to be ready in late 2003 or early 2004.

Meanwhile, San Francisco-headquartered Joie de Vivre Hotels is increasing Silicon Valley's hotel inventory with four boutique properties, a type of hotel that Chip Conley, company chairman and CEO, said is sorely missing from that part of the Bay Area.

"As the high-tech market becomes more consumer driven, the nature of the people who visit Silicon Valley has changed," he said. "Now there are more advertising reps, film producers and that type of people instead of just engineers. Our travel agents in New York were screaming that they needed different types of hotels for their clients who come to Silicon Valley. They wanted something different than a standard hotel like a Courtyard."

Listening to the agents, Conley said Joie de Vivre is making a commitment to the Silicon Valley, starting with four hotels. The company purchased two Ambassador Business hotels, put in $6 million in renovations and opened them as the 91-room Hotel Avante in Mountain View in October and the 208-room Wild Palms in Sunnyvale this month. Joie de Vivre also has built two new properties-the 80-room Moorpark in San Jose, which opens April 1, and the 72-room La Plaza in Los Gatos, which will be ready in the fall.