Newport Beach's hotel business is on the rise, the city's destination marketing company reported to the City Council last week during its 2013 annual budget submission.
"Our industry is thriving," Visit Newport Beach's Gary Sherwin said. "It's actually performing better than much of our competitive set."
Summarizing a 136-page annual marketing plan, Sherwin, Visit Newport's president and chief executive, contended that the city's hotel industry — comprised of 17 major hotels that provide 2,900 hotel rooms and 17,000 square feet of meeting space — is leading Orange County's market.
The plan cited travel-related data from numerous hospitality consulting services, including Smith Travel Research Global and PKF Consulting, and identified international, regional and local travel projections for the coming fiscal year.
Sherwin's presentation highlighted four major categories used to gauge hotel business: occupancy average, or the number of rooms occupied as a ratio to the number of rooms available; average daily rate, which is the average price of all the rooms sold by the hotel at any given day; revenue per available room, known as RevPAR; and general revenue.
Though tourism is up locally and nationally, Sherwin said many hotels are not burgeoning in all four categories like Newport is.
According to the presentation, Newport's RevPAR — the best indicator of how the industry is doing because it includes figures from the average occupancy and the average daily rate — is up 13.4% from May 2011, at $132.28 per available room. It's projected to increase in the coming fiscal year to $148.68 per room.
Increased local hotel traffic usually generates more revenue for city services from the state's transient occupancy tax, or TOT, which is charged for overnight stays. City tax data indicates that TOT projections for fiscal year 2012 are about $13.3 million, slightly higher than the year before.
"These numbers are very important," Mayor Pro Tem Keith Curry said at Tuesday's council meeting. "It's clear by the evidence you presented that [the TOT] does in fact drive revenue to the city.
"It is these revenues from people who are not residents and not taxpayers here locally, but visitors who pay for and subsidize our public services, our police, firemen, lifeguards and the quality of life we all enjoy … the tourism industry are the economic engines in Newport Beach that keep our finances strong and sustainable going forward."
On a national level, Jan Freitag, senior vice president of global development at Smith Travel Research, attributes the statewide increase to several factors, including a limited supply of newly built hotels, pricing power and a strong increase in demand.
"We have sold more rooms than ever before in the first five months of this year," he said July 13. "That's 4.5 million rooms. The American public is traveling, and American business traffic is back on the road, despite the bad news you hear."
Commenting on increased tourism and hotel stays regionally, Bruce Baltin, senior vice president of PKF Consulting's Los Angeles office, confirmed that Newport's hotel business has surpassed its neighboring cities. He pointed to an improved economic situation as the cause.
"What you're seeing are the later stages of recession recovery," Baltin said July 13. "We're now in kind of the advanced stages of recovery. In Southern California, [travel] is rising faster than the national level because we're a tourist destination and because of our huge population base.
"Local travelers cut back the budget rather than the time. They still travel; they just stay local."
International travel is also contributing to the boom, though not as much.
Vicki Higgins, Visit Newport's senior vice president of marketing, said July 13 that the agency will focus on marketing to China because of the increased travel that has resulted from the Obama administration's reduction of travel regulations.
Visit Newport has offices in the U.K. and Australia, which helps increase international travel to Newport by 33%, according to its marketing plan.
Newport Beach Marriott Hotel and Spa General Manager Debbie Snavely credits her increased business traffic in part to Sherwin and his immediate staff's marketing efforts. She noted that her hotel's group meeting space has been very successful this year.
"Gary has an exceptional team," Snavely, who also serves on Visit Newport's board of directors as vice chairwoman, said Thursday. "Yes, Newport is a known leisure destination, but they're out there selling and bringing in large business groups. It's hard work to sell a destination and really put ourselves on the map, but they've done the hard work. And we're seeing the results."
— Staff Writer Mike Reicher also contributed to this report.