The Los Angeles hotel industry has had its best year in decades and 2001 is shaping up to be another banner year.
Hotel rooms were hard to find in Los Angeles last summer, as more tourists and business people visited Southern California. A flurry of visitors attending the Democratic National Convention in August and the Grammy Awards in February, both held in downtown Los Angeles, pushed the hotel occupancy rate up to 75.8 percent in Los Angeles County and the average room rate to $121 a night.
That should improve slightly next year. Analysts predict that in 2001, the hotel occupancy rate will inch up to 76.2 percent and the average hotel room will cost $126.50 a night.
A weaker U.S. dollar should entice more international tourists to the city, and the opening of Disneyland's new theme park in Anaheim is expected to cause a spillover effect and bring hotel visitors into L.A. County.
"Although the convention market in Los Angeles in 2001 is not quite as strong as in 2000, the overall economy in Southern California will be good next year," said Bruce Baltin, a hotel industry analyst at PKF Consulting Inc., a hospitality research group. "Downtown Los Angeles will have other benefits, such as more self-contained meetings and more international meetings."
The slightly weaker U.S. dollar will bring more European and Asian visitors who have stayed home in recent years because the euro and yen had lost a good share of their purchasing power, making U.S. goods and services more expensive to them.
California Adventure, Disneyland's new theme park, opens Feb. 8. That, combined with a renovated Anaheim Convention Center, should bring more visitors to all of Southern California.
The convention center now has 815,000 square feet of exhibit space, a 40 percent increase over the pre-existing one. Anaheim's meeting mecca is now the largest on the West Coast, overshadowing the Los Angeles Convention Center, which has a little more than 700,000 square feet of exhibit space.
Already Anaheim has 46 conventions scheduled for its upgraded center in 2001, bringing in about 600,000 visitors. The Los Angeles facility has 34 conventions booked for next year that will draw approximately 550,000 out-of-towners.
Some hotel operators are worried about the competition from Orange County. The Walt Disney Co. has plans to construct a third theme park in Anaheim. The first phase is planned to open in 2003 while the entire project should be completed in 10 years.
"Certainly Anaheim is more competitive today than it was a year ago," Baltin said. "But we are forecasting that Anaheim will increase the supply of visitors. There will be a spillover from Orange County that will more than make up any downside (for L.A.-area hotels)."
Brian Fitzgerald, general manager of the Westin Bonaventure Hotel in downtown L.A., echoed that upbeat note. "We are cautiously optimistic about next year," said Fitzgerald, whose 1,354-room hotel is the largest in L.A. "There has been a lot of conversation about Anaheim and Disney. But it's like having a great restaurant move in next door. The more people who move in, the more business it brings in. If tourists come to Disney, they're not going to pass up Los Angeles. After all, there's only one Rodeo Drive."
There are also other L.A.-area attractions to visit, such as Universal Studios in the San Fernando Valley and Magic Mountain in Valencia, which recently announced it will be building three new roller coasters next year.
Indeed, the Los Angeles County Economic Development Corp. is predicting there will be 25 million overnight visitors staying in Los Angeles next year, a 2.9 percent increase over 2000.
But that does not mean L.A.'s tourist industry is bulletproof.
"Travel is very competitive," said David Sheatsley, director of research at the Los Angeles Convention and Visitors Bureau. "Los Angeles will have to work harder to get tourists back from Anaheim, which is trying to become a destination resort."
One of the things Los Angeles will have to do to maintain its market share is build more hotels around the downtown convention center, which now has only 650 hotel rooms within walking distance.
Staples Center plan
This spring, Los Angeles Arena Co., which owns the Staples Center sports arena near the L.A. Convention Center, has proposed building a 1,200-room, 40-story hotel as well as an entertainment center with dining, a theater and retail shops near the two major facilities. Another 600-room hotel would be added later.
But Staples officials are looking for the first hotel to be subsidized with public funds. L.A. city officials are skeptical but have agreed to study a subsidy proposal.
Next year, no new hotel projects are expected to begin construction in downtown Los Angeles, where the average occupancy rate was 70.1 percent this year. Downtown occupancy is expected to dip slightly next year to 69.9 percent, according to PKF Consulting.
Only one new downtown hotel is scheduled to open in 2001. That is the 210-room Standard Hotel at Sixth and Flower streets, occupying the former Bank of California building. It is the sister hotel to the trendy West Hollywood Standard Hotel on the Sunset Strip. The downtown Standard will bring the total number of hotel rooms in that area to 5,056.
While downtown has a hotel occupancy rate slightly below the county average, that is not the case in Santa Monica.
Hotel demand is so strong there that, even though two high-end hotels opened recently (Casa del Mar and Le Merigot), the occupancy rate is still around 80 percent. That should remain about the same next year, with room rates averaging $223.75 a night, PKF Consulting reported.
Marina del Rey remains a popular hotel spot, too. Its average occupancy rate was 83.7 percent this year, one of the highest in Los Angeles County. With no new hotels planned for the area next year, occupancy rates are expected to increase to 84.1 percent and the average room will cost $150.75 a night.
No new hotels are planned for Beverly Hills either, where the occupancy rate averaged 74.9 percent this year. That is expected to improve by 1 percentage point next year.
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