Housing vs hotels graphic
(Joshua Molina / Noozhawk illustration)

A showdown is brewing over whether Santa Barbara needs more housing or hotels.

Amid pressures from the state and local activists to build more housing, declining hotel revenue, and skepticism of the City of Santa Barbara’s sometimes clunky development policies, the community is wrestling with the future of planning here.

The debate has played out on Santa Barbara’s center stage, the Planning Commission, with hotel developers regularly being told to consider housing instead of hotels, or in addition to the hotels.

With Santa Barbara required by the State of California to find locations to build 8,001 new housing units by 2030, officials and activists are laying heavy pressure on City Hall for housing.

But developers contend it’s often more cost-effective to build a hotel than housing in areas where they are both allowed.

Developers often complain the city won’t give them enough building height in areas where both hotels and housing are zoned. If they can’t get enough density, hotels are a more economically feasible option, they say.

“We simply don’t need more hotels and resorts — and definitely not bougie ones,” said Stanley Tzankov, a housing activist and donor relations manager for the advocacy group. CAUSE (Central Coast Alliance United for a Sustainable Economy).

“Instead, I think most would agree we’ve been needing more housing that’s truly affordable, and lots more of it, not more hotels.”

City planner Allison DeBusk told Noozhawk that — as of Sept. 13 — there are currently 27 hotel projects in the pipeline, which includes 635 hotel rooms, 130 rooms that already have been approved and 167 with building permits.

For housing through the city’s Average Unit-Size Density program apartments, she said, the city has 146 units pending, 320 units that have been approved and 275 that have been issued a building permit.

For accessory dwelling units, DeBusk said, the city has 259 units pending and 261 units with building permits as of Sept. 11.

Amid these development trends, Santa Barbara’s hotel tourism has been on the decline, raising questions about whether more hotels should be built.

Visit Santa Barbara, the city’s tourism arm, has mixed feelings.

“Taking a longer view, we believe that additional hotel supply eventually would be useful to support the area’s economy after visitor volumes gradually increase,” said Kathy Janega-Dykes, president and CEO of Visit Santa Barbara.

“Meanwhile, we agree that prioritizing residential developments over commercial development makes sense, in cases where both options are allowed by the city.”

Santa Barbara’s existing hotels have about a 30% vacancy rate, she said.

Future hotel construction, Janega-Dykes said, should not be seen as the enemy of housing.

“The solution to Santa Barbara’s lack of housing starts with fixing failed development policies, not increasing targeted taxes on hotels,” Janega-Dykes said.

Tom Patton, general manager/partner at the Ramada by Wyndham Santa Barbara, said he is not in favor of new hotel development at the moment.

“While I am not in favor of a building moratorium on hotels, I believe we should focus on utilizing the existing stock of hotel rooms rather than adding more rooms,” he said.

“We are below our historical occupancy numbers, so we definitely have room with the existing hotels to add more visitors.”

Patton said the City of Santa Barbara should take responsibility for some of the reasons developers turn to hotels over housing.

“Developers are proposing new hotels either because they cannot build housing on those sites or it is better economically to build hotels,” he said.

“I believe in the free market but if the city is serious about adding more housing units, then they need to remove roadblocks with either zoning or permitting and make it just as economically viable to build housing units as hotel rooms.”

Developer Ed St. George said hotels are necessary in Santa Barbara.

“If anyone would take the time to really study the history of Santa Barbara, they would realize this town has always been a tourist destination,” he said. “In a town the size of Santa Barbara, restaurants need tourists to survive.”

St. George also said there should be no competition between hotels and housing.

The amount of land available to build hotels is a fraction of that available for housing, he said.

“The amount of properties that you could build a successful hotel on in this town is extremely limited, whereas 98% of the properties in this town you could build successful housing,” said St. George, who develops housing and hotels.

“Why would a housing developer pay the premium for a rare hotel property and then build a housing project?”

He said hotel bed tax revenues are down, but they shouldn’t be.

“It’s sadly very obvious why tourism is down in Santa Barbara and it’s for the exact reason it’s been obliterated in other beautiful cities like San Francisco, Santa Monica and Seattle,” St. George said. “Homelessness and crime.”

Some locals believe that illegal vacation rentals are also straining hotel occupancy rates.

“I’d guess that the thousands of short-term rentals — the vast majority of them as we know illegally operating — are to attribute for the decline in hotel occupancy,” Tzankov said.

“I think the city finally strengthening its regulations and enforcement will help not only pick up hotel occupancy to reflect the reality that our tourism is thriving, but also help disincentivize displacing long-term tenants for unfettered profit-seeking Airbnbs.”

CAUSE policy director Frank Rodriguez agreed.

“We cannot overlook how short-term rentals are taking away taxable revenue that hotels provide Santa Barbara,” he said.

“The city just took action to enforce the current ban on illegal short-term rentals because of how prevalent it is in our community.”

Rodriguez said enforcing laws against illegal short-term rentals will increase the use of hotels locally.

Mayor Randy Rowse called the decline in tourism “merely a snap-back after the dramatic run-up we had as COVID restrictions lifted.”

“Everyone was jonesing to get out, and consumerism shot up like a rocket, helping to fuel some of our current inflation,” he said.

“Locally, hotels enjoyed daily room rate spikes that enhanced transient occupancy tax revenues, and restaurants also benefited from pent-up demand.”

Rowse said the “decline” is more of a trend back to normal.

He said he supports both housing and hotel development.

“Supporting the activities of those who build affordable housing is a goal I think we all share,” Rowse said. “It’s important to carefully measure how we go about achieving that.

“In addition, there are a robust number of units coming up out of the ground, which should help to stabilize some of the housing cost run-up.”