HOTELS—Pasadena Hotels Have Rosy Outlook Amid Industry Slump

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While hotels nationwide struggle to survive a severe travel downturn, Pasadena inns are performing quite well, and they’re poised to do even better next year.

Those are among the findings of the 2002 Southern California Lodging Forecast released Nov. 1 by PKF Consulting, a hospitality industry research firm.

Thanks largely to Pasadena’s greater dependence on domestic rather than international travelers, the city’s hotel occupancy rate this year is a comfortable 72 percent. (The breakeven point for hotels is around 60 percent.)

Next year PKF projects that rate to rise to 73.2 percent.

Much of the projected boost will come in early January, when thousands of football fans will hit town for the NCAA national championship game, which pits the nation’s top two college football teams.

It will be the first year that the traditional Rose Bowl will not be played since that “granddaddy of bowl games” premiered in 1947. The traditional Rose Parade will still take place on New Years Day, but the national championship will not be held until Jan. 3.

That means visitors likely will stay in town an extra two days, filling Pasadena’s 2,500 hotel rooms and possibly spilling over into Glendale, Burbank and other surrounding cities.

“This is the Super Bowl of college football,” said Leann Lampe of the Pasadena Visitors and Convention Bureau. “We are going to be trying to capture every tourist dollar we can.”

Hotels in other areas of Los Angeles County are expected to see only a slight improvement next year. “For Los Angeles County, there will be a 2.5 percent growth in hotel room demand next year over this year, putting the hotel industry well below 2000 levels,” said Bruce Baltin, senior vice president of PKF Consulting.


One-two punch

Two factors affecting the local hospitality industry include a continued slowdown in international travel and fewer major conventions scheduled for Los Angeles.

“International tour groups typically book vacations six to nine months in advance of their travel dates,” Baltin said. “Tour operators and hotels heavily dependent on international travel have indicated that international travel is not expected to be strong in 2002.”

But again, Pasadena may be the exception.

Three of the city’s five largest hotels the Doubletree Hotel Pasadena, the Hilton Pasadena, and Sheraton Pasadena Hotel negotiated a contract last July with Qantas Airways to house the airline’s crew between international flights.

That averages out to 250 rooms a night, said Alexi Hakim, area vice president for Doubletree and Hilton Hotels. Previously the crews were staying in Long Beach and San Pedro.

While the airline does not pay top room rates, it is paying around $70 a night to stay at the upper mid-level hotels.

But overall, international travel to L.A. will be slow next year, according to PKF.

Travelers from Asia, particularly Japan, are still wary about stepping on a plane and going overseas. In addition, the Japanese economy is continuing its slow-motion meltdown.

“The Japanese economy is in serious, serious trouble right now,” said Wayne Williams, a Los Angeles hotel consultant who works with Japanese hotels here and in Japan. “We don’t know what is going to happen.”

While the average Los Angeles hotel occupancy rate in 2002 is expected to hover around 71 percent, that is down considerably from 76 percent in 2000 and the estimated 70.5 percent rate for this year.


Downtown doldrums

One of the hardest-hit areas will be downtown Los Angeles, which relies heavily on convention business, corporate travelers and international visitors. “While we are expecting commercial travel to rebound in 2002, growth is expected to be modest,” Baltin said.

The average occupancy rate for downtown hotels is projected to be around 62 percent next year, up from 58.2 percent this year but well off the 69.2 percent in 2000.

Another area greatly affected by the downturn is the Los Angeles International Airport area. With far fewer people flying since the Sept. 11 terrorist attacks, only 49.3 million travelers passed through LAX during the first nine months of this year. That’s down from nearly 60 million during the first nine months of 2000.

Consequently, LAX hotels’ 82.3 percent average occupancy rate last year is projected to drop to 75.1 percent this year, then rebound to 76.3 percent next year.

Another hard-hit market is Santa Monica, where high-end hotels charge $300 to $400 a night. “In 1991, during the Gulf War, the mid-scale hotels took the brunt of the downturn. Those who stayed in the upscale hotels pretty much continued to stay in them,” observed Williams. “Now, the corporations and entertainment companies that used to stay in high-end hotels are saying, ‘We can’t afford the $300-to-$400-a-night hotels while we’re laying off people,’ so they’re taking their corporate meetings from the five-star hotels to the mid-scale hotels.”

Santa Monica’s average hotel occupancy rate of 79.6 percent last year is projected to sink to 70.0 percent this year and stay at that level in 2002.

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