Race for Space : Cities, Hotels Maneuver for Tourist Dollars

The first shots are being fired in the Hotel War of the South Bay.

At stake is more than the success or failure of the hotels. The prizes also include enhanced images for the cities whose hotels do well and a boost to their economies--plus a tidy sum, provided mostly by the bed tax, for city treasuries. South Bay cities took in $4.7 million last year from surcharges to hotel bills.

Discount Prices

Among the weapons are a host of come-ons, ranging from a sudden rash of discount prices and more attentive service to golf courses, the beach, marina slips, the Spruce Goose and the Love Boat. Two South Bay cities, Torrance and Redondo Beach, are forming tourism bureaus to attract customers.

The cause of the war lies in a continuing frenzy of hotel construction that has left hoteliers--particularly in the South Bay--fearful that, at least in the short run, they already have built too much too soon and may lack enough customers.

As in many a war, geography and timing are crucial.

To the north are the massive dreadnoughts around Los Angeles International Airport--the Airport Hilton with 1,280 rooms, the Airport Marriott with 1,012, the Sheraton with 810 and four others with more than 500--all waiting for air travelers. To the southeast is Long Beach, where port business, the Queen Mary and an increasingly vital urban center have attracted another bold armada of hotels.

Hemmed in by both is the emerging hotel fleet of the South Bay, where the ocean, aerospace industry and Pacific Rim trade are bringing more visitors. The South Bay hotels must not only defend against raids from the north and the southeast, but also have to contend with each other.

The background to this economic warfare is a startling period of growth in the hotel industry along the southern coastal crescent of Los Angeles County.

Boosted by increasing tourism and industrial and commercial development, the hotel industry in the South Bay, near the airport and in Long Beach boomed in the last six years, according to figures provided by Pannell Kerr Forster, a national hotel consulting firm.

First-Class Rooms

Near the airport, the area with the largest hotels, the big chains poured in nearly a quarter of a billion dollars in construction money from 1980 to 1986, increasing the number of first-class rooms from 5,000 to 9,000. In Long Beach, the number of first-class rooms more than doubled in the same period, rising from 1,100 to 2,500.

In the South Bay, the number of first-class hotel rooms went from 700 in 1980 to 1,500 last year--providing for the first time a South Bay hotel market distinct from LAX and Long Beach, according to Diane Yep of Pannell Kerr Forster’s Los Angeles office.

“Historically, you have two markets, Long Beach and LAX,” and customers for hotel rooms in the South Bay were going there, Yep said.

“As the (Torrance) Holiday Inn and the (Torrance) Marriott were developed, they were able to accommodate some of that demand” for rooms in the South Bay but some was still leaking to the Long Beach and LAX market. Development in Torrance, she said, has created a tremendous demand for hotel space.

Much of the new demand is generated by business associated with new commercial and industrial construction. The amount of commercial space in the South Bay has increased 37% during the last two years, while industrial space has also grown, albeit less dramatically, according to Yep.

To satisfy increased demand, hotel officials in the three areas are planning a new raft of hotels and the South Bay is the leader.

Indeed, the number of first-class hotel rooms being built or planned in the South Bay is a staggering 3,700--more than twice what is currently available.

‘Going Up All Over’

“God, they are going up all over the place and not just the major hotels,” said Bud Cormier, assistant director of redevelopment in Hawthorne, where officials are negotiating to put a first-class hotel near the San Diego Freeway and the aerospace industrial complex.

A partial list of projects in the works includes Ibis and Radisson hotels in Carson, a Holiday Inn near Vermont Avenue and the Artesia Freeway, the Hawthorne redevelopment hotel, a hotel in Torrance’s eastern redevelopment area and an Embassy Suites hotel in the Harbor Gateway.

The market is also hot in Long Beach, where tourism officials predict that the number of first-class rooms within walking distance of the harbor convention center will double during the next three years. And nearby in San Pedro, where the hotel industry is just coming alive, officials predict the number of first-class rooms near the waterfront--currently about 300--will triple by 1990. Even near the airport, where construction has slacked off, a new Marriott Courtyard with 145 rooms is expected to open this year.

Notwithstanding plans to add more rooms, hotels--particularly those in the South Bay--are finding, at least for now, that the large number of hotel rooms on the market has made competition intense enough to hurt profits, according to interviews with hoteliers, hotel industry consultants and city officials.

Discount Rates Offered

It is a conclusion borne out by the prevalence of special offers that amount to discount rates to lure customers and statistics on occupancy rates gathered by the national accounting firm of Laventhol & Horwath.

South Bay occupancy rates for January, the latest period analyzed, dropped from 72.5% in 1986 to 63.1% this year.

The January slippage in the South Bay--the only area in Los Angeles County to show a decline in occupancy rates--occurred while Long Beach held steady, rising slightly from 74.2% to 74.4%, and the LAX area, flooded by Super Bowl fans, soared from 75.9% to 82.6%.

“Basically, the going is tough,” acknowledged Eckhard Lubba, general manager of the Radisson Plaza hotel in Manhattan Beach, which opened last year. “We are a new property. Whenever you open a new property, you come in on the low side.”

Package Deal

His hotel recently began offering a $79 package that provides a game of golf on the hotel’s nine-hole course or a glass of champagne and breakfast.

“Without the package, it would be $95 and it wouldn’t include the golf or the champagne and breakfast,” he said.

In Torrance, bus shelter signs on Hawthorne Boulevard promote the Marriott’s package for $59.

Inside the hotel, guest Fred Smithye, a chief steward with British Caledonian Airways, paused for a moment at the registration desk the other day, a golf bag on his shoulder. His company recently began sending plane crews on overnight stays to the Torrance Marriott, which is considered a quick drive from the airport.

“They usually take us to where they get the best deal,” he said.

Discount for Volume

Marriott marketing manager Mark Hakim, who confirmed that demand has been soft lately, said the airlines are regularly offered discounts for bulk service.

Hakim said the hotel is making a special effort to be solicitous of its guests, rather than counting on luxurious trappings to bring them in.

“It is not glass and brass and marble anymore,” he said. “There is always a better collection of glass and brass. What people remember is service, hospitality.

“All these hotels opening left and right--look at Long Beach, the airport, the Radisson, the Sheraton . . . .” New business, he said, will “go to the person who does the best job of providing service. We will try.”

‘Honored-Guest’ Program

Another guest, Charles Gutman, an advertising man from New York, said it was the Torrance Marriott’s “flexibility” with its “honored-guest” program, similar to the airline frequent-flyer arrangements, that made him choose the Torrance Marriott over other hotels and other Marriotts. Gutman, with a smile, declined to explain what he meant by “flexibility,” adding that he did not want to give away Marriott’s trade secrets.

He had been in town for eight days with his wife, Audrey, and daughter, and their friends, Steve and Karen Mann, and their two children. The group had used the hotel as a base to see Universal Studios, NBC, Disneyland, the San Diego Zoo and Sea World.

“No complaints. It has been superb,” Audrey Gutman said of the hotel service. Her daughter Lindsay was asked what she liked best about her stay.

“The pool,” she said.

$6-Million Refurbishing

At the Holiday Inn across the street, workers are putting the finishing touches on a $6-million refurbishing, which general manager John Webber said was totally designed to enable the hotel, which opened in 1975, to regain its competitive edge.

“I’m here for one purpose--profit,” he said. “That called for a major renovation.”

The newly opened Radisson in Manhattan Beach is promoting its nine-hole golf course, which, Yep said, is a draw among Japanese businessmen: “Japanese like golf courses.”

In Carson, the city is locked in difficult negotiations with a developer to put up an Ibis hotel on city land. The developer is citing the increased competition as a reason why the city should sweeten its deal.

City Would Get 6%

In return for abandoning an obligation to build a $402,000 parking garage, the developer, who wants the city to build it instead, is offering the city 6% of the ownership of the hotel. The city, so far, is resisting the offer.

In San Pedro, the secret weapon in hotel promotion is nothing less than a total remaking of the area’s image to glamorize the working-class image of the port.

“We have some major recreational facilities coming on line,” said Leron Gubler, executive director of the San Pedro Peninsula Chamber of Commerce. By 1990, an enlarged marina will have 3,000 boat slips and a $40-million Fisherman’s Wharf is expected to create the upscale waterfront atmosphere that is luring tourists to a number of ports around the nation.

And, adds Gubler, “the Love Boat still comes here.” He noted that the port is the nation’s second largest harbor for cruise ships as well as an occasional stop for television’s most famous floating set.

Visitor Bureaus

To get the word out to travel agents and convention organizers, several cities use or are planning to use municipal visitor and convention bureaus.

Long Beach formed one in 1982 that now has a $2-million budget, 60% of which comes from bed tax revenues. The bed tax totaled $3.6 million in the 1985-86 fiscal year.

Bill Miller, president of the Long Beach Convention and Visitors Council, said the council “will give us some edge because the South Bay area is growing so fast. Our hotels are feeling the edge right now.”

Redondo Beach, where a new Sheraton hotel just opened, is forming what will be known as the Redondo Beach Marketing Council.

Sell Resort Atmosphere

The organization, said city planner Jim Graham, will market the city’s resort atmosphere as a pleasant add-on to its easy access to industry and tourism centers.

The area has “what the Beach Boys sing about,” he said. “We have got clean air. We have the ocean, the surfers. We have pretty girls. . . . You can watch the sunset.”

The Torrance City Council, lobbied by the Chamber of Commerce and the city’s major hotels, is mulling over plans to begin a visitors bureau to promote Torrance hotels.

“It is incumbent on us to protect that investment,” declared council member Bill Applegate at a recent council meeting.

Needed to Compete

“We want a visitors bureau here to compete with the surrounding communities,” said John Donald, general manager of the Torrance Marriott. “What we are talking about are the new hotels opening up in Long Beach and the Sheraton in Redondo Beach.”

Adding up all the proposed hotels, the Torrance Chamber of Commerce made the case for a city-sponsored visitors bureau with the gloomy prediction that the city’s hotels “will have to prepare for a decline in occupancy, or make efforts to draw additional visitors. . . . A significant downturn in the current occupancy rate would lead to price-cutting measures” which “would result in tremendous pressure on the smaller hotels in the area. Depending on the severity of the downturn, operating small motels could become unprofitable.”

That would put a dent in bed-tax revenues, the chamber said. Torrance took in $1.8 million in bed taxes in the 1985-86 fiscal year and is budgeting revenues this year at $2.2 million--about 3% of the city’s general fund.

Although Torrance officials are in agreement that something has to be done, exactly what and how are still being debated.

Unanswered Questions

Among the undecided issues is whether to run the bureau as part of the Chamber of Commerce, as an independent agency, or as part of city government. Also up in the air is the amount, if any, that the city will contribute to the bureau’s budget.

A survey by Redondo Beach of 20 California cities with visitor bureaus found varying arrangements, most with some link to the local Chamber of Commerce. City funding ranged from a low of one-quarter of the bureau budget in San Luis Obispo to all of it in San Jose, Santa Barbara, Santa Monica, Pasadena, Ventura and Culver City.

The same survey showed that the percentage of the bed tax used for funding visitor bureaus also varied dramatically. In Monterey, with the smallest percentage, only 3.8% of the bed tax went to fund the visitors bureau. Long Beach, which used up 38.8%, ranked first.

The bed tax is not the only benefit that cities receive.

$185 a Day Spent

According to a 1986 survey of travel expenses, Laventhol & Horwath estimated that the average Los Angeles area visitor spends $185 a day. Only $70 is spent on lodging, with the rest going mostly for transportation, meals and entertainment--all of which generate sales-tax revenues, user fees and utility taxes as well as jobs in the local economy. For example, visitors to Torrance are expected to spend more than $60 million during the current fiscal year, according to the Laventhol & Horwath estimates.

But more than dollars are at stake. Some city officials fear that their city will lose stature if it does not act to raise its profile among the hotel clientele.

Torrance Mayor Katy Geissert, a steadfast promoter of her city’s virtues, brought this up during council discussions.

“Torrance,” she said ruefully, “has been known as the best-kept secret in California for many years.”

LOTS OF ROOM AT THE INN

Hotel Location South Bay Holiday Inn 21333 Hawthorne Blvd., Torrance Residence Inn Torrance & Hawthorne Blvds., Torrance Torrance Marriott Torrance & Hawthorne Blvds. Radisson Plaza 1500 E. Rosecrans Blvd., Manhattan Beach Marriott Courtyard 2000 Mariposa Ave., El Segundo Sheraton King Harbor, Redondo Beach Torrance Quality Inn 2081 S. Western Ave., Torrance Palos Verdes Inn 1700 S. Pacific Coast Hwy., Redondo Beach Best Western Inn 1850 S. Pacific Coast Hwy., Redondo Beach Best Western Sunrise 400 N. Harbor Dr., Redondo Beach Portofino Inn 260 Portofino Way, Redondo Beach Man Bch Resid. Inn 1700 N. Sepulveda Blvd., Manhattan Beach Mavar Grand Hotel 1st & Gaffey streets, San Pedro Quality Inn Pacific Coast Hwy. & Harbor Freeway TraveLodge 901 Aviation Blvd., Hermosa Beach South Bay, Proposed Ibis Carson St. & Avalon Blvd., Carson Compri Cabrillo Marina, San Pedro Sheraton 6th & Palos Verdes Sts., San Pedro World Cruise Center Harbor Blvd. at Vincent Thomas Bridge Hawthorne Redev. Aviation Blvd. & Rosecrans, Hawthorne Marriott Courtyard Crenshaw & Sepulveda Blvds., Torrance Torrance Marriott Torrance & Hawthorne Blvds., Torrance Radisson Avalon Blvd. & 182nd St., Carson Compton Plaza Alameda Street & 91 Freeway Gascon Mar Torrance Blvd. & Western Ave., Torrance Torrance Inn Madison Ave. & Pacific Coast Hwy., Torrance Holiday Inn 19800 Vermont Ave., Torrance Embassy Suites Harbor Gateway, Los Angeles Portofino Inn addition King Harbor, Redondo Beach Sheraton near King Harbor, Redondo Beach LAX area LAX Hilton 5711 W. Century Blvd., Los Angeles Stouffer Concourse 5400 W. Century Blvd., Los Angeles Sheraton 6101 W. Century Blvd., Los Angeles Hyatt 6225 W. Century Blvd., Los Angeles Marriott 5855 W. Century Blvd., Los Angeles Holiday Crown Plaza 5985 W. Century Blvd., Los Angeles Viscount 9750 Airport Blvd., Los Angeles LAX Area, Proposed Marriott Courtyard 2000 E. Mariposa Ave., El Segundo Long Beach Hyatt Edgewater 6400 E. Pacific Coast Hwy., Long Beach Holiday Inns 2640 Lakewood Blvd., Long Beach 500 E. 1st St., Long Beach Queen Mary Pier J, Long Beach Viscount 700 Queens Way Bay Dr., Long Beach Golden Sails Hotel 6285 E. Pacific Coast Hwy., Long Beach Hyatt Regency 200 S. Pine Ave., Long Beach Breakers 210 E. Ocean Blvd., Long Beach Ramada Renaissance 111 E. Ocean Blvd., Long Beach Marriott 4700 Airport Plaza Dr., Long Beach Long Beach, Proposed Sheraton 100 Long Beach Blvd., Long Beach Queen Mary Pier J, next to Queen Mary TraveLodge 700 block, Queens Way Bay Dr., Long Beach World Trade Center Ocean Blvd. & Magnolia Ave., Long Beach Westin Hotel Pine Ave. & Shoreline Dr., Long Beach Pacific Coast Club 850 E. Ocean Blvd., Long Beach

Hotel Rooms Open/ Remodeled South Bay Holiday Inn 386 1975 Residence Inn 248 1984 Torrance Marriott 487 1985 Radisson Plaza 400 1986 Marriott Courtyard 160 1987 Sheraton 339 1987 Torrance Quality Inn 102 1986 Palos Verdes Inn 112 1983 Best Western Inn 109 1985 Best Western Sunrise 110 na Portofino Inn 139 1965 Man Bch Resid. Inn 175 1985 Mavar Grand Hotel 60 1986 Quality Inn 72 1987 TraveLodge 63 1987 South Bay, Proposed Ibis 248 1988 Compri 232 1988 Sheraton 232 1989 World Cruise Center 200+ 1990 Hawthorne Redev. 400-450 1989 Marriott Courtyard 200 1989 Torrance Marriott 200 na Radisson 240 1989 Compton Plaza 300 1989 Gascon Mar 250 1990 Torrance Inn 177 na Holiday Inn 360 na Embassy Suites 300 na Portofino Inn addition 50 1988 Sheraton 350 2/87 LAX area LAX Hilton 1280 1983 Stouffer Concourse 750 1986 Sheraton 810 1981 Hyatt 596 1976 Marriott 1,012 1972 Holiday Crown Plaza 612 1984 Viscount 571 1966 LAX Area, Proposed Marriott Courtyard 146 1987 Long Beach Hyatt Edgewater 250 1950 Holiday Inns 233 1967 200 1982 Queen Mary 387 1971 Viscount 250 6/87 Golden Sails Hotel 175 Hyatt Regency 531 1983 Breakers 242 1985 Ramada Renaissance 380 1986 Marriott 300 1987 Long Beach, Proposed Sheraton 501 1988 Queen Mary 350 1989 TraveLodge 250 1988 World Trade Center 400 na Westin Hotel 520 na Pacific Coast Club 300 na

Sources: Pannell Kerr Forster; Torrance Area Chamber of Commerce; Convention & Visitors’ Council of Long Beach; city and hotel officials.