Hotel Occupancy Will Improve While Rates Suffer, Report Finds
By ANDY FIXMER
Staff Reporter
Following two years of declining occupancy and room rates, a new report by PKF Consulting projects Los Angeles hotels will see revenues grow by 1 percent in 2003.
While the increase may seem paltry, it’s a strong showing compared with other major markets across the country, according to Bruce Baltin, a PKF senior vice president.
“That’s pretty good,” Baltin said. “Most of the nation has trended downward.”
PKF projects an average countywide occupancy level of 68.5 percent by year’s end. That marks an upward revision from PKF projections last October that saw a year-end rate for 2003 of 65.3 percent.
The increase, spurred by an uptick in travel and further cost cutting by hoteliers, is dampened by a projection that average room rates will fall by $4 by the end of the year, to $113.
The price difference will prevent revenue levels from climbing more than 1 percent higher per available room by the end of the year.
“This recovery is nothing to get excited about if you’re a hotel owner,” said Wayne Williams, president of Williams & Associates, a hotel asset management firm. “But at least we’re going in the right direction.”
Los Angeles hotel submarkets vary greatly, and the areas PKF anticipates will show strength are Long Beach, South Bay, Los Angeles International Airport, Santa Monica, Hollywood and Valencia.
The gains were due to a variety of factors, including growth by discount airline Jet Blue in Long Beach and tourists taking advantage of discounted prices in Santa Monica.
Regions that rely on international and commercial travel will continue to lag, the report projects. Japanese tourists aren’t expected to return in great numbers for years, though if the euro continues to gain on the dollar, the report said Europeans could step up their travel.
Baltin said downtown hotels, which continue to have the lowest occupancy levels in the region, wouldn’t see a return of business until there is a turnaround in L.A.’s slumping convention business. “And that’s going to take some time,” he said. “It’s a real challenge.”
Downtown hotels with room rates above $85, on average, booked 39.31 percent of their rooms in April, according to the most recent data from PKF. Comparatively, coastal hotels and those in Pasadena, West Hollywood and Valencia posted occupancy levels in April higher than 70 percent.
While Los Angeles is performing better than the country and California as a whole, it still lags behind San Diego, which has been barely affected by the recession.
