Hollywood Paces Slight Increase in Regional Hotels’ Occupancy Rates
By ANDY FIXMER
Staff Reporter
Led by gains in Hollywood, West L.A. and the South Bay, hotel occupancy rates squeaked out a modest increase during the first six months of the year, reversing dramatic declines that followed the Sept. 11, 2001 terrorist attacks.
Countywide, occupancy rates increased 1.1 percent during the January-June period, to 67.5 percent, reversing the 8.7 percent decline posted in the first six months of 2002, according to PKF Consulting, which tracks the hotel industry.
The gains coincided with a slight decline in daily room rates, which averaged $115.36 countywide, 3.4 percent lower than the year-earlier period.
Hollywood, where occupancy levels rose 9.7 percent through January-June, posted the greatest gains. Its 67.8 percent average occupancy over the period bested the 66.8 percent average over the first six months of 2001, before the post-terror attack travel drop off.
Indeed, the submarket closed out the first half of the year in strong fashion, its 78 percent June occupancy level lagging only Valencia (82.2 percent) and Santa Monica (78.2).
“People are feeling much more optimistic now than they have been,” said James Stockdale, a PKF consultant. “Numbers are starting to show that things may have bottomed out and now they are starting to bounce back a little bit.”
In all, fewer than half of the 16 submarkets surveyed by PKF posted declines, and most of those were narrow. The wider gains were dampened by continued weakness downtown, which saw occupancy at large hotels drop to 47 percent through the first six months. Through the first six months of 2002, downtown occupancy was at 49.6 percent. In the same period of 2001 it stood at 61.7 percent, according to PKF.
The lone bright spot downtown was in its few low-priced hotels. Those hotels, whose average daily room rates averaged $77.25 through the first six months, posted a 12.3 percent occupancy gain to reach 56.1 percent over the period.
The strength at those hotels, which cater to budget-minded tourists and not business travelers, along with the increases in Hollywood, are the flip side of the ongoing weakness in the business travel market, according to Neale Redington, national partner in charge of Deloitte & Touche’s hospitality division.
“With all the corporate belt-tightening, business travel is the worst segment of them all,” he said. “People just aren’t traveling for business right now.”
Still, some business centers did see an uptick in occupancy, particularly the South Bay and Century City/Westwood markets, which logged respective gains of 6.1 percent and 4.9 percent over the January-June period.
The inching up of occupancy levels came as all but two of the county’s submarkets saw average daily room rates decline, most by less than 5 percent, over the first six months of the year.
Countywide, the average room rate of $115.36 in the period was off 7.4 percent from the level in the first six months of 2001, when it stood at nearly $125.
Only Santa Monica and Valencia saw average room rates rise, by 2.5 percent and 2 percent respectively, something unheard of during the travel and convention slowdown of the past two years.
