Holding
Pattern for Hotels |
By Ed Moosbrugger
August 20 -- A weakening economy, high fuel prices, airline
woes and price resistance have put a dent in Santa Monica’s
vital visitor industry this year, but it’s still performing
reasonably well. Entering the busy summer season, hotel occupancy
in Santa Monica was down slightly but was still at a high level.
And some Downtown hotels report strong summer business, although
there is some consumer resistance to Santa Monica’s high hotel
room rates.
Through May, Santa Monica’s hotel occupancy rate dipped 1.1
percent to 81 percent, but the city still boasted the highest occupancy
rate among submarkets in Los Angeles County tracked by PKF Consulting.
The average room rate was up 6.1 percent, although some hotels reported
rates flattening out.
“We are cautiously optimistic that our summer will remain
pretty solid,” said Misti Kerns, president/CEO of the Santa
Monica Convention & Visitors Bureau, in mid July.
She noted, however, that as predicted, there has been a slowdown.
“Occupancy reports reflect a slight dip down,” Kerns
said. “Retail overall has been softening for the last few
months.”
Downtown hotels report a mixed picture.
The second quarter was a big challenge for the Fairmont Miramar
Hotel at Wilshire Boulevard and Ocean Avenue because of weaker group
and corporate business.
But July and August appear to be going very well, Ellis O’Connor,
general manager of the hotel, said in mid July. Occupancy was expected
to rise 5 to 6 percent in July compared to a year earlier. Occupancy
of 84 to 85 percent in July and 90 percent in August is expected.
Price resistance, however, is evident. Fairmont Miramar room rates
are flat with last year.
It’s been a strong summer for Hotel Carmel at Second Street
and Broadway.
“We’ve been full or almost full every night,”
said General Manager Sherry Kellogg. “Business has been incredible.”
Most of August was already sold out as of mid July.
The hotel, which is moderately priced for Santa Monica, has benefited
because consumers are “downsizing their spending,” Kellogg
said. Renovations to the hotel have also helped.
At the Ocean View Hotel on Ocean Avenue “it has been a slower
summer than normal,” but business picked up substantially
after July 4, said General Manager Robert Farzam. Ocean View Hotel
is promoting special rates because of the economy.
Tourism has been a safety net for many Downtown businesses that
have been hurt by the weakening domestic economy.
“I don’t think there’s any shortage of tourists,”
said Jeff King, board chair and co-founder of King’s Seafood
Co., which owns i Cugini and Ocean Avenue Seafood on Ocean Avenue.
The proof: The two Santa Monica restaurants probably have been hurt
the least of King’s 17 restaurants by the economic downturn,
according to King.
“Tourism is a godsend,” King said.
One of King’s Santa Monica restaurants is about even with
last year, while the other is down slightly. Overall, sales at King’s
restaurants open at least a year are down 7 to 9 percent this year,
reflecting the tough times for the restaurant industry.
Although high fuel prices and major headaches facing air travelers
have undoubtedly hurt Santa Monica, the beachside city appears to
be picking up some business from the region as people stay closer
to home on their vacations.
O’Connor of the Fairmont Miramar believes so. He noted encouraging
occupancy at the hotel on weekends and an increase in parking revenue
this year, even though many rooms were not available in the first
half due to renovations. That indicates more of the guests are driving
to the hotel.
Looking beyond summer, the visitor industry outlook is unclear.
“The booking pace is somewhat flat,” O’Connor
said. He called that “encouraging” in light of economic
conditions and softness in the corporate market.
“I’m uncertain,” O’Connor said. “Nobody
is taking anything for granted.”
Kerns is very concerned about the capacity cutbacks announced by
the airlines.
“The effect overall to us in Santa Monica could be detrimental,”
she said.
A recent Travel Industry Association survey showed that deep frustration
among air travelers caused them to avoid an estimated 41 million
trips over a 12-month period.
“The air travel crisis has hit a tipping point – more
than 100,000 travelers each day are voting with their wallets by
choosing to avoid trips,” said Roger Dow, president and CEO
of TIA, in a statement in late May.
Some Santa Monica hotels may have received a little boost to their
occupancy rates because some rooms at competing hotels have been
off the market.
Hotel Shangri-La on Ocean Avenue, which at one time had hoped to
reopen this summer after extensive renovations, now probably will
open in late October or early November, said General Manager Dino
Nanni.
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