Vacancies in L.A. County Hotels Rise in 1st Quarter
A drop in business and leisure travel led hotels in Los Angeles County--particularly high-end properties--to post increasingly lower occupancy rates through the first three months of this year, according to an industry survey.
The report by PKF Consulting in Los Angeles reflects a weaker economy that could lead to higher vacancy rates into the summer, tourism officials said Wednesday.
From January through March, the pricier hotel markets of Pasadena, Santa Monica and Marina del Rey--where nightly rates run $150 and up--saw occupancy drop 7%, 6.7% and 8.8%, respectively, from last year’s first three months.
Among the county’s 162 hotel properties surveyed, overall occupancy fell 0.5% for the quarter, to 79%. But in March alone, the rate fell 2.5%.
“We originally anticipated overall occupancy to be up in the first quarter,” said Rick Frolich, a PKF analyst. “But January was flat, February was down and then March dropped down a little more. Based on this report, we’re now expecting slower travel for the second quarter as well.”
The cost of a room for one night rose 3.5% to $127.05 from last year’s first quarter, PKF found. Frolich now predicts that overall occupancy will drop 1% in Los Angeles County this year and that the average daily room rate will climb to $129.
Orange County--buoyed by heavy Anaheim convention traffic and the draw of the new Disneyland Resort expansion--saw occupancy rates rise 2% for the quarter. In March, though, the countywide rate dropped 1%. The average cost of a one-night stay rose 6.6% to $120.85 for the quarter.
Occupancy rates are being most affected by a cutback in business travel, experts said. Companies--more so than tourists--are usually first to respond to economic uncertainties, said Nancy Sidhu of the Los Angeles Economic Development Corp. But the economist said tourism travel this summer may be more affected by the state’s energy crisis.
“When it comes to travel trends, it’s going to be difficult to disentangle the electricity problems from the economic worries,” Sidhu said. “And since neither looks very promising at this point, I would say hotel occupancy rates will be as bad or perhaps worse in the next few months.”
Still, some hotel operators said they are not alarmed by the decrease and expect a strong, slow-growth summer.
“We’re feeling really very good,” said Edd Karlan, a spokesman for Anaheim Hilton & Towers. “March was an absolute windfall for us, mostly due to the conventions, and now we’re finally seeing the leisure market pick up over here, too. We’re predicting a strong, healthy second quarter.”
The occupancy increases enjoyed by 22 hotels surveyed in Anaheim come after more than two years of falling rates because of construction around the Disneyland Resort. Bill Snyder, executive director of the Anaheim Area Hotel Motel Assn., said the increase in visitors is a much-needed boost for hotel operators.
“The construction is finally finished and we can now reap the rewards,” Snyder said. “I’d say the [latest occupancy figures] are on target with what we expected. We’re certainly doing our part in carrying the county, and that feels good.”
The rising vacancy levels probably won’t last much longer, said hotel consultant James T. Kelly in Newport Beach. He notes that first-quarter figures are generally lower than the rest of the year.
“I don’t believe the decreases we’ve seen are anywhere near what we originally feared,” Kelly said. “There are still people going after their weekend getaways, even high-end ones.”
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Hotels Feel the Slowdown
The slowing economy meant fewer patrons at hotels in most of Los Angeles County, especially pricier areas. But Orange County got a boost from the expanded Anaheim Convention Center and Disneyland Resort.
Change in hotel occupancy rate, from first quarter 2000:
Source: PKF Consulting
