Occupancy Declines at San Gabriel Valley Inns
Hotels in much of the San Gabriel Valley are suffering a severe decline in occupancy rates even as new hotels continue to spring up in the area, a survey has found.
The study, released recently by the accounting firm of Pannell Kerr Forster, says that the glut is likely to get worse during 1990. While the supply of hotel rooms in the valley will grow substantially this year, they are expected to be only half-filled, which would be an 11% drop in occupancy from 1987, and a 6% drop from 1989, the survey said. In contrast, Hollywood hotels are expected to be 78% occupied, and Santa Monica’s probably will be 70% full.
Elsewhere in the county there already are small downturns in the hotel market, reflecting an expected 5% occupancy decline countywide, the report says. However, West Los Angeles is expected to fare well, as luxury and first-class hotels there experience a slight increase in business.
For purposes of the survey, researchers considered Pasadena, Arcadia and Monrovia separately from the rest of the San Gabriel Valley. And in those cities, the outlook was a little less grim.
Overall, however, the only good news was that San Gabriel Valley hotel rooms are among the cheapest in the county.
The survey is bad news for many San Gabriel Valley cities, which have been banking on booming hotel construction to bring hefty increases in bed and sales tax revenues. Now, local innkeepers are engaging increasingly in “hotel wars” in an attempt to lure travelers, offering such amenities as exercise facilities, Asian-influenced menus and multilingual staffs.
Still, San Gabriel Valley hotel executives said they are not surprised by the area’s low numbers, explaining that they do not rely on the Southern California tourism market, which for West Los Angeles’ luxury hotels translates into $276-a-night rooms and 70%-plus occupancy rates.
“We’re not in the most desirable area,” said Susan Barnes, sales and marketing director for the Sheraton Rosemead Hotel, which is scheduled to open in March. “People don’t say, ‘Let’s go to the San Gabriel Valley for vacation.’ ”
“Who comes here unless they’re coming here for business?” asked Margy Fuller, sales director for Days Inn in Diamond Bar.
The dim forecast has not lowered Barnes’ expectations for the 148-room Sheraton, which she said will depend on “a strong corporate base” for 75% to 80% of its business.
Some hotels already are feeling stiff competition in the limited market. The 196-room Hilton Hotel in Baldwin Park, for example, had an occupancy rate of only 34% in September, three months after it opened. And by the first of the year, it still had not hit the 50% mark.
“We’re not really where we want to be, but we’re hanging in there,” said sales director Melissa Egy.
The hotel’s struggles are particularly worrisome to Baldwin Park’s Redevelopment Agency, which owns a 50% interest in the Hilton and is responsible for any deficits the establishment may incur.
“Obviously, it concerns us,” Beverly Pearce, the city’s housing and economic development director, said of the hotel survey. “We hope that what hotel business there is in the San Gabriel Valley will be attracted to the Hilton. However, we’re all observing a certain amount of resistance in the marketplace, which we believed we would easily steal.”
Even in the Pasadena area, known nationally as a tourist attraction for its annual Rose Parade and Rose Bowl game, a significant drop in occupancy rates is expected: from 81% in 1987 to 70% this year, the survey said. During 1989, the Pasadena area’s hotels posted a 76% occupancy rate.
