Airport Areas Find Favor for Hotel Projects
With an eye on business travelers, hotel developers seem to be ignoring downtown Los Angeles and are locating new projects near Southland airports.
There are 15 hotels with a total of about 4,500 rooms under construction in the Los Angeles area, the majority of which are located near airports in Los Angeles, Long Beach and Ontario, according to Britton Colbert, partner at the Los Angeles office of Laventhol & Horwath, the Philadelphia-based accounting firm.
“The airport area has become more competitive than downtown,” said Karl Schaefer, vice president and general manager of the 500-room Sheraton Grande Hotel in downtown Los Angeles. But the picture is improving downtown as more office buildings continue to open, he said. Average occupancies of downtown hotels, which dipped to the mid-60% range last year, could improve to the high 60% range this year, Schaefer said.
In its annual U.S. lodging industry outlook released this week, Laventhol & Horwath projects a somewhat rosier picture for the Los Angeles hotel market than for the nation as a whole.
New construction is expected to slightly reduce the room occupancy rate nationally to about 64%, while the Los Angeles market should see occupancy remain stable at about 68%, the report says.
The Los Angeles hotel market, which includes Long Beach, has about 150 hotels with nearly 39,000 rooms. The recent growth in the 20,000-plus room Orange County hotel market could lead to an occupancy rate decline there in 1986, Colbert said.
The spurt of hotel growth around airport areas is not unique to Los Angeles, Colbert said. With airport areas continuing to expand as business centers, similar growth is taking place in airport areas of Atlanta, Dallas and Pittsburgh, Colbert said.
In addition, a rash of new hotels has sprouted near Orange County’s John Wayne Airport, including the 319-room Four Seasons Hotel, which is scheduled to open in July.
Most hotels in airport areas are commercially oriented and are used by business travelers almost exclusively. The airport hotels allow executives speedy access from the airport and, in most cases, eliminate the need to rent cars.
In the Los Angeles International Airport area, a 750-room Stouffer Concourse Hotel is scheduled to open in June, along with a 400-room Radisson Plaza Hotel in nearby Manhattan Beach. At the same time, a 374-room Ramada Renaissance is under construction near the Long Beach Airport, while both Hilton and Compri have projects under way near the Ontario International Airport.
The new hotels may also help to keep room rates in check, analysts said. Although average room rates in the Los Angeles area jumped 8% in 1985, the increase in room supply and low inflation could combine to keep average rate increases less than 5% this year, Colbert said.
The average nightly room rate in Los Angeles was about $75 last year, about 25% less than New York, which posted 1985 average room rates of $101.
