They Still Love L.A. : Ailing Downtown Hotels Saw Occupancy Rates Rise but the Trend May Not Last

After years of losing guests in the wake of riots and recession, the ailing hotels of Downtown Los Angeles experienced a dramatic turnaround last year. The trick will be to do as well in 1995.

The opening of the expanded Los Angeles Convention Center and the staging of the World Cup soccer finals attracted thousands of out-of-town visitors, boosting Downtown occupancy levels by nearly 10% over 1993 levels, according to a forecast by PKF Consulting in Los Angeles.

Even the Northridge earthquake helped as insurance adjusters and federal emergency workers filled rooms.

But this year, Downtown hoteliers will have to work hard to improve upon or perhaps even to match last year’s performance. Even if they do, those hotels will still lag far behind suburban competitors that have filled up rooms at Downtown’s expense.

“1995 is going to be a challenge,” said Larry Kantor, a hotel consultant with Arthur Andersen in Los Angeles.

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First, there will be no major event like the World Cup, which generated an estimated $100 million in revenue for area hotels. More important, the Los Angeles Convention Center will have only 12 major conventions, whereas there were 17 last year, according to Michael Collins, senior vice president of the Los Angeles Convention & Visitors Bureau.

The decline in major conventions is attributed to the Los Angeles riots of spring 1992. That’s when convention planners, who often pick a major show site three years in advance, scratched Los Angeles off their lists for 1995 events. “When people cast venue decisions three years ago, we were out,” Collins said.

Fewer conventions and also other factors will lower the average annual occupancy rate for Downtown hotels--which are more dependent on convention goers than suburban ones--by about 2 percentage points, to 55% this year, said Bruce Baltin of PKF Consulting. “All things considered, that is not that a big difference. That’s actually pretty good.”

The lost conventioneers’ business will be replaced in part by a pickup in business travelers and small corporate meetings at Downtown hotel conference and meeting rooms.

At the Hotel Inter-Continental atop Bunker Hill, general manager Lew Fader said its small-group and corporate meetings business this month is double what it was a year ago.

“It’s very encouraging, and certainly much better than we had expected,” said Fader, who expects the ’95 occupancy rate at the 440-room hotel to rise slightly over last year.

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Large foreign and domestic tour groups that fled to suburban hotels in the wake of the riots have also begun to return. Kenji Yoshimoto, general manager of the 434-room New Otani Hotel in Little Tokyo, said he expects a 10% increase in the number of Japanese guests this year.

“They were scared (of Downtown) and they went to hotels in Orange County and West L.A.,” Yoshimoto said. “But now they are coming back.”