Hilton Corp. Will Quit Management of Hotel at Irvine

IRVINE —  Hilton Hotels Corp. said Tuesday that it is pulling out of its management of the Irvine Hilton so it can go hunting for new prospects.

Both Hilton and the Irvine Co., which owns the 550-room hotel on Jamboree Road, said they have mutually agreed to end the five-year relationship. Hilton cited the Irvine Co.’s restriction on hotels managing other hotels in the same area as the reason for the break.

“As we reviewed our corporate development plans for Southern California, it became clear that geographic restrictions in our agreement precluded us from pursuing other promising projects in the area,” Hilmar A. Rosenast, a Hilton senior vice president, said in a statement.

Don McNutt, vice president and general manager of the Irvine Co., said the restriction in Hilton’s agreement applies generally to the area surrounding John Wayne Airport, which has numerous hotels.

All of the airport-area hotels, including the Irvine Hilton, have suffered from low occupancy levels and room-rate wars in recent years because of overbuilding and because of restrictions on the number of airline flights.

Jay Oxford, the Irvine Hilton’s general manager, would not comment when asked if the company is negotiating to operate another hotel in the airport area or is contemplating developing a new one.

He said, however, that Hilton will stay on through Oct. 15 and that most of the 450 employees will probably be able to keep their jobs under the new management. “We want our guests and employees to know that business will go on as usual,” Oxford said.

McNutt said that the Irvine Co. is actively searching for a new hotel operator to replace Hilton.

“We are, and have been, talking to other hotel operators,” he said, adding that he expects a decision within the next 30 days.

The hotel is the second largest among the four Hilton properties in the county. The largest is the Anaheim Hilton with 1,600 rooms. The new 300-room Waterfront Hilton in Huntington Beach opened just last week. The smallest is the 230-room Hilton Suites in Orange.

Opened in 1985, the Irvine Hilton is one of two hotels owned by the Irvine Co. The other one is the Four Seasons in Newport Beach. The company also has announced plans to build three resort hotels overlooking the ocean between Laguna Beach and Newport Beach.