Executive Summary
With several years of high occupancy rates and essentially no new supply, hotel operators focused on raising room rates in 1998.
Average daily room rates have been rising steadily since 1993, but growth really started to spike in 1996, according to PKF Consulting. Last year, the daily rate in Los Angeles County rose by 8.5 percent.
Meanwhile, the local hotel occupancy rate is essentially flat, with a rise of only 0.5 percent last year over 1997. The financial crisis in Asia has been blamed, along with unfavorable weather last year caused by El Ni & #324;o.
PKF Consulting projects that 1999 occupancy growth should remain modest and the growth in average daily room rates will slow as business people take on a more cautious attitude about travel expenses. Visitors spent $11.9 billion in L.A. County in 1998, a 5 percent increase over 1997 levels, according to the L.A. Convention and Visitors Bureau.
The rising room rates have attracted developers, particularly in areas like downtown where new amenities are being built. Two new hotels have been proposed near the Convention Center and Staples Center.
The Pacesetter
The Westin Bonaventure Hotel and Suites is by far the largest hotel in Los Angeles County. With its round glass towers and modernistic shape, it is also one of downtown’s principal landmarks. Aside from its 1,354 rooms and 186 suites, the hotel houses a six-story atrium with a lake, a six-level shopping gallery and more than 40 restaurants, lounges, gift shops and boutiques.
At the beginning of this year, a 15,000-square-foot Asian-themed spa was opened, called the Bonaventure Club. In addition, an indoor running track just above the six-story atrium was constructed.
The Bonaventure, which has been owned since 1995 by a Taiwanese-American company, Forward Time Inc., sees roughly 90 percent of its business from corporate travelers and conventions. In 1998, it hosted 30 conventions, some in conjunction with other hotels downtown. In 1999, it will host 34 conventions. While business declined in 1998 due to a slowing Asian market, occupancy rates were still higher than they were in 1997. In response to the strong demand for its facilities, it raised room rates by almost 12 percent last year over 1997.
