O.C. Hotel Demand Steady; Rates Rise Slightly
Thanks to the strong economy and resurgence of foreign travelers, Southern California hotel operators managed to boost the average price of their rooms last year while triggering little drop in demand, even in the construction-marred Anaheim area, according to reports released Thursday.
Orange County occupancy held steady at about 70% while room rates rose 2.2%, to an average of $104.05, according to PKF Consulting, which monitors the hotel industry. But regional trends emerged: In Anaheim, occupancy fell 2.4%, to about 68%, while South County hotels filled their rooms 73% of the time, up 4.8%.
The slowdown in Anaheim had been expected as Disney and the city together are spending $2 billion on expanding tourist and business facilities. The process, which has torn up streets and snarled traffic, has resulted in conventions being scheduled elsewhere and tourists delaying trips to Disneyland.
But with the expansion planned at Disneyland and the Anaheim Convention Center, the hotel industry is betting that Orange County will not only recover from construction woes but boom as a destination for vacationers and business meetings.
A separate study released Thursday by Atlas Hospitality in Costa Mesa showed that Orange County has 12,320 hotel rooms in development, more than any other California county. More than half those rooms are in Anaheim.
San Diego County had the second-largest number of rooms in development, 10,926; Los Angeles County was third with 7,581.
However, Atlas President Alan X. Reay said he expects much of the Anaheim-area hotel construction to be delayed. Hotel financing is hard to come by these days, he said, and the developers want to see how the Disney and Convention Center expansions work out.
“In 18 to 24 months, the picture should be a lot brighter,” he said.
Last year, according to PKF’s report, Los Angeles County hoteliers increased their room rates by about 5%, largely because new technology, foreign trade and other commerce have attracted business visitors.
In addition, business travelers flocked to the downtown Convention Center, which generated nearly 14,000 more overnight hotel stays last year than in 1998, according to the Los Angeles Convention & Visitors Bureau.
Leisure travelers, meanwhile, have also had a hand in the growth of the region’s tourism industry, which analysts say sustains more than 300,000 local jobs and kicks in an estimated $6.1 billion in wages and salaries.
Los Angeles County hotels saw their volume of overnight visitors increase by about 1% last year even as they pushed average nightly room rates from $109.68 to $114.61. The PKF report found that the county’s major guest lodges were booked to roughly three-quarters capacity.
Frank Lavey, general manager of the Hyatt Regency Los Angeles downtown, said higher demand has driven up room rates and allowed the hotel to discard discount room offers it once needed. In good economic times, people are just willing to pay more, he said.
“We don’t put ourselves on sale as much as we used to,” Lavey said. “We’re getting more demand from higher-priced business.”
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Room at the Inns
Orange County hotel occupancy moved slightly lower last year while room rates edged up. Hotels suffered the biggest declines in occupancy in Anaheim, which is in the throes of major construction projects.
Room Rate and Occupancy Rate, 1999
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Av. Daily % change Occupancy % change Room Rate from 1998 Rate from 1998 Newport Beach $140.08 1.8% 71.06% +5.8 South Orange County 108.36 2.9 73.16 +4.8 Anaheim 103.43 1.4 67.63 -2.4% Orange County Airport 102.21 2.6 71.92 -0.7 North Orange County 74.99 2.7 68.36 0 AVERAGE* 104.05 2.2 69.66 -0.4
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* Weighted by number of hotel rooms per zone
Source: PKF Consulting
