Weather, Construction Dent O.C. Hotel Business

By E. SCOTT RECKARD

June 12, 1998 12 AM PT

TIMES STAFF WRITER

Orange County hotels hosted 5.7% fewer guests during the first four months this year than last, thanks to torn-up Anaheim streets and freeways and the all-purpose culprit, El Nino.

By contrast, Los Angeles County hotels shook off wintry rains to end the four months with visitors up 1.3%, according to PKF Consulting, a Los Angeles firm that studies lodging.

It is an ominous sign for Orange County’s tourism industry, which generates about $5.5 billion a year in sales. The slump affected all regions of the county, although the South County and John Wayne Airport areas fared better than others.

Industry officials are hoping that the return of sunny weather and Disneyland’s $100-million update of Tomorrowland will help reverse the trend of the first third of the year.

The growing occupancy in Los Angeles County occurred despite room rates that were up a robust 9.4% from early 1997, to an average of $110.50. In Orange County, the average room rate rose 6.5%, to $102.98.

“Frankly, it was a weird market for the first four months, with the Asian crisis, El Nino, the construction in Anaheim. Nobody can quite put a finger on how much effect each of those has had,” PKF Senior Vice President Bruce Baltin said Thursday.

What is clear is that conventions and meetings are off noticeably in Anaheim, where $4.2 billion is being spent to prepare for and build a new Walt Disney Co. theme park and an expanded convention center. Traffic in the Disneyland area is squeezing through ripped-up streets and past the concrete and metal-rod structures of new freeway construction.

In April, hotel occupancy in Anaheim was down 8.9% from a year earlier despite a 4.1% cut in the average room rate, to $98.09, the PKF statistics showed.

Los Angeles clearly has benefited from the flight. At the seven major convention-oriented hotels in downtown Los Angeles, occupancy and room rates are both up more than 10%, the PKF figures show.

Charles Ahlers, president of the Anaheim/Orange County Visitor and Convention Bureau, said he expects convention attendance to fall 5% this year, to about 930,000. That’s down from 979,000 last year and far below the 1 million Anaheim shoots for--and achieved repeatedly in the late 1980s and early 1990s.

Not all the decline is being caused by dust and rubble, Ahlers said. One reason the National Assn. of Music Merchants moved its convention to Los Angeles this year after 22 years in Anaheim was that it had outgrown the Anaheim facility--a problem that will be addressed when the Convention Center reopens with 40% more space late in 2000.

In 2001, when Disney’s new California Adventure park is scheduled to open, the travel and tourism picture improves markedly, Ahlers said. Indeed, 92 groups of 10,000 people or more already have booked convention space from 2001 on.

“Our future is so bright, we’ll have to wear sunglasses,” Ahlers said.

At beach resorts, the villain early this year was downpours instead of development. As Midwestern snowbirds, usually beckoned by California sun, basked in unseasonably warm El Nino temperatures, their televisions were showing floods and mudslides devastating such purported paradises as Malibu and Laguna Beach.

The stalled tourist business also drove occupancy at Newport Beach hotels down 8.2% in the first four months, a pain offset somewhat by a 9.7% rise in room rates, to an average $132.93.

“We had a lot of no-shows, a lot of cancellations in January and February,” said Rosalind Williams, executive director of the Newport Beach Conference & Visitors Bureau.

Ian Connell, spokesman for the California Lodging Industry Assn., said Newport’s problems have been repeated statewide.

“What we call discretionary travel--’tourism for fun’ with the family, kids--is down all over because of El Nino,” Connell said.

In a recent filing with securities regulators, Disney said Disneyland attendance fell early this year because of Tomorrowland construction and bad weather. Higher guest spending partially offset falling revenue, and Disneyland spokesman Bill Ross said the park’s overall performance and occupancy at the Disneyland Hotel have met expectations this year. He declined to provide exact figures.

Statewide, the strong economy has boosted convention business, helping to offset widespread damage by the foul winter weather. Connell said that, overall, it has been a good year so far--if not a great one--for the state’s travel-related businesses.

Except for the rainy season, the recent tourist business in Newport Beach has exceeded prerecession levels, Williams said.

“The expectation is that the El Nino stuff is behind us, and with Disneyland opening and marketing (the revamped) Tomorrowland, the expectation is for Orange County to have a good summer compared to the first four months,” Baltin said.

But he added: “At this point, we don’t know if that’s really the long-term trend.”

Bill Snyder, executive director of the Anaheim-area Hotel/Motel Assn., said his members expect economic bumps until the street and utility improvements are complete.

The additions to the Convention Center in past years posed only limited construction-related problems. Not so this year, Snyder said.

“Previously, it was just the Convention Center site with a minor disruption. Now it’s all the streets, all the freeways, all at once,” he said. “They’re biting the bullet all at once, and expecting things will be great when it’s done.”

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Hotel Occupancy, Convention Attendance Down

Bad weather and construction around the Anaheim Convention Center are crimping Orange County’s tourist and convention industries. Here’s how hotel occupancy rates from the first four months of this year compare with the same period a year ago, and how convention attendance is doing:

Hotel Occupancy Rate

*--*

Countywide Anaheim Newport Beach 1997 Jan. 65.48% 61.98% 65.17% Feb. 77.42% 75.61% 79.87% Mar. 77.45% 78.05% 74.64% April 79.14% 82.05% 74.72% 1998 Jan. 61.45% 55.41% 62.22% Feb. 72.69% 71.10% 75.08% Mar. 74.46% 75.62% 66.35% April 73.25% 74.76% 66.54%

*--*

Convention Attendance

The 1998 figure is expected to fall below the 1-million mark for the fourth consecutive year:

Convention Attendance

1988: 1,026,728

1989: 1,062,347

1990: 1,000,176

1991: 1,064,502

1992: 1,029,244

1993: 950,916

1994: 1,023,311

1995: 919,616