The Ups and Downs of Summer

By Ed Moosbrugger

Oct. 9 -- Downtown hotels were still searching for a pattern in their business as the important summer season drew to a close and the second anniversary of 9/11 passed.

“The summer was almost like Six Flags Magic Mountain -- a roller coaster,” said Paul Hortobagyi, general manager of the Georgian Hotel.

June was “horrible” because of extended overcast weather, but July and August were “very nice,” and September started off softer, he said.

“It’s still unpredictable,” said Robert Farzam, general manager of the Best Western Ocean View Hotel. “We’re still struggling.”

Farzam said business for June through August was about the same as last year, with June down a bit. “I still think we haven’t recovered back to normal,” he said. “I would give it a year to recover to pre-9/11.”

At Hotel Shangri-La, General Manager Dino Nanni said, “July and August was better than we expected,” adding that prospects are looking a little bit better, but not at normal levels.

Normal for Santa Monica hotels is very good, with stronger occupancy and higher room rates than other markets in Los Angeles County.

“Normal is 90 percent occupancy,” Nanni said. “We are only seeing high 70s, low 80s.”

Even though Santa Monica is down from its peak levels, the local hotel market is still good, and occupancy is strong, said Lauren Schlau, whose marketing and consulting firm does studies for the Santa Monica Convention & Visitors Bureau.

Indeed, Santa Monica is thankful that it is doing better than most markets in the region, said Misti Kerns, executive director of the local visitors bureau.

For the first seven months of 2003, Santa Monica had the second-highest hotel occupancy rate among Los Angeles County markets tracked by PKF Consulting, trailing only Valencia.

But Santa Monica continues to show mixed results. Its 75.4 percent occupancy rate for the first seven months this year was down 2.2 percent from a year earlier, while its average room rate increased 2.3 percent to $194.36, according to PKF.

In July, Santa Monica posted an occupancy rate of 82.8 percent, down 1.5 percent from 2002, but its average room rate edged up 0.8 percent to $176.21. During July, Santa Monica trailed Valencia, Marina del Rey and the LAX area in occupancy rate.

Santa Monica’s transient occupancy tax revenue has begun to turn up, according to the visitors bureau. This is partly due to new hotels. While Downtown hotels say they are working harder than ever to attract business, they also note some recent positive signs in the important international market.

Hortobagyi noted a strong influx of visitors from Italy and a pleasing return of some Japanese clientele, while Nanni saw "some international travelers coming back,” including those from England, Japan and Germany. An increased drive market also has helped, Nanni said.

Both the domestic corporate market and the international travel market have been hurt by the soft economy and the aftermath of 9/11, consultants and hotel managers report.

“Everybody is watching their expenses,” Hortobagyi said.

People are bargaining more over rates and some hotels have added perks such as free continental breakfasts, in-room coffee and no-smoking rooms to compete, Farzam said.

“It’s a buyer’s market,“ Kerns said. “Value is the key in the travel business now.”

Despite the tougher challenges, Santa Monica appears to be holding up pretty well, with Hortobagyi giving a big measure of credit to strong sales efforts.

Schlau expects Santa Monica hotels to post an occupancy rate of 75 percent this year, which would be on par with last year, even though there are more hotel rooms now.

Santa Monica’s budget and economy-level lodgings continue to hold their own, while occupancy has begun to pick up at the luxury hotels, Kerns reported.

Schlau said international flights are starting to increase, which is good news for a Santa Monica visitor industry that relies heavily on foreign travelers.

“LAX is starting to see more growth,” Kerns said. “I think that trend will continue.”