Hotel Room Rates Rise, but Not Occupancy

The price of the average hotel room in Greater Los Angeles grew by nearly 5% in January even as occupancy remained flat, according to data released Tuesday that reflect an ongoing inflationary trend in the local hospitality industry that began last year.

The average price for an overnight hotel stay in January was up $5.13 from $108.74 a year ago, according to statistics from PKF Consulting, which tracks the region’s hotel industry. Yet even as the cost per night grew, occupancy rates remained mostly steady, dropping just 0.6% in January compared with last year.

The January figures underscored a trend among county hotels, which last year saw average room rates climb nearly 9% while occupancy remained largely unchanged, posting a slight increase of 0.5%.

Over the last several months, local hotel operators have been ratcheting up the price per room in a bid to match room prices of other major metropolitan areas such as New York and Chicago. For example, the average price of a New York hotel room is about $202.

Michael Collins, executive vice president of the Los Angeles Convention & Visitors Bureau, said the rising local rates were also the effect of a strong U.S. economy that has encouraged a jump in both domestic and business travel to the region.

Among 16 sub-markets, PKF tracks in the county, Hollywood stood out in January with a 26% drop-off in occupancy. Collins blamed the dive on the announcement last year by the Hollywood Holiday Inn--in the heart of the district--that it planned to close its doors April 1 for a two-year renovation project.

Collins said that even though the hotel remained open in January, news of the closure was enough to scare off bookings, especially high-volume convention and foreign tour business.

“You take the Holiday Inn out of the equation, it’s going to be a rough path for Hollywood until that property is back up again,” Collins said. Other Hollywood hotels, he said, just aren’t big enough to attract bulk tour and convention business.

Meanwhile, in Orange County, occupancy dropped by 2% while the average room price increased by nearly 4% to $103.50. The January figures mirrored full-year statistics for 1998 that showed the cost per room in Orange County jumped 7% while guest counts dropped 4%, largely due to heavy construction in Anaheim, the county’s main attraction hub.