Tourism
Market Remains Strong |
By Ed Moosbrugger
January 14 -- Santa Monica's tourism industry, already
operating at a high level, can expect another solid year in 2008.
Hotel occupancy likely will be flat, but room rates will continue
their march upward because of a tight market.
“We forecast another year of moderate growth in Santa Monica
for 2008,” said PKF Consulting in its annual hotel forecast
presented by Bruce Baltin, senior vice president.
PKF expects no increase in occupied rooms, but predicted a 7 percent
increase in average room rate.
Indeed, the hotel occupancy rate is predicted to dip to 81.2 percent
in 2008 from an estimated 82.2 percent in 2007 and 81.4 percent
in 2006.
The occupancy rate numbers are affected by hotel renovations that
temporarily took some rooms off the market. That meant fewer rooms
available in 2007 than in 2006 and expected in 2008.
Still, the Santa Monica tourism market remains solid.
“Tourism is thriving and is stronger than ever in Santa Monica,”
said Misti Kerns, president/CEO of the Santa Monica Convention &
Visitors Bureau. “It has really surpassed all expectations.
The destination is booked with visitors nearly all year long, and
occupancy and room rates are the strongest on record.”
Santa Monica remains one of the strongest hotel markets in Los Angeles
County, with an occupancy rate of 83.9 percent for the first 10
months of 2007, up 0.3 percent from a year earlier. The average
room rate increased 9.9 percent to $275.73, according to PKF.
Despite its strong position, the Santa Monica tourism industry faces
challenges in 2008. They include economic uncertainty and difficulties
in international travel to the United States.
Kerns expects hotel occupancy in Santa Monica to flatten out in
2008 and average room rates to rise about 5 percent.
Santa Monica isn’t immune from national, and international
developments, and one of the most worrisome is the failure of international
travel to the United States to fully recover since 9/11.
“Despite the weak dollar making the U.S. a travel bargain,
overseas visitation to the U.S. has yet to surpass the record level
set in 2000,” according to the Travel Industry Association
(TIA).
Santa Monica will be operating in a tourism industry climate that
is expected to see moderate growth in travel, according to the TIA.
The trade group's forecast sees travel spending by domestic and
international visitors rising 5.2 percent in 2008, compared to an
estimated 5.7 percent increase in 2007.
Domestic leisure trips will rise 2 percent in 2008, and international
travel will increase 3.7 percent, while business travel will rise
only 0.4 percent, per TIA estimates.
Fortunately, Santa Monica has done better than many visitor destinations
in the post 9/11 period.
Compare the 82.2 percent occupancy rate and $269.41 average room
rate estimated for 2007 with the 74 percent occupancy and $188.21
average room rate in 2002.
“Its waterfront location and vibrant atmosphere assisted in
making this market one of the quickest to recover after 2001,”
said PKF. “The stability of the market can be attributed to
the presence of a stable commercial segment combined with high-end
group and leisure business.”
Hotel renovations also have helped, PKF said.
“With the recent renovations of many local hotel properties,
Santa Monica is attracting many of those who desire a luxury destination,”
Kerns said.
With Santa Monica already a strong market for individual travelers,
hotels now are turning more attention to the meetings and incentive
markets, Kerns said.
Meanwhile, Hotel Shangri-La on Ocean Avenue is about to complete
a major renovation. The hotel probably will reopen in June or July,
said Dino Nanni, general manager.
Another Ocean Avenue hotel Downtown is undergoing a big change.
The Ocean View Hotel dropped its affiliation with Best Western at
the end of September.
The change caused a slowdown in business, which the hotel expects
to reverse as its new marketing kicks in, said Robert Farzam, general
manager.
Meanwhile, the hotel is offering greatly discounted rates through
the end of February.
Farzam said business had been strong in 2007 until the hotel dropped
out of Best Western to save on commissions and fees. The pain was
eased a bit by business from the American Film Market in November.
“I think we will be okay because of our location,” Farzam
said.
Indeed, location is a key reason for the success of Santa Monica’s
visitor industry. PKF noted that the city is a prime location relative
to area amenities, most notably the ocean.
Meanwhile, the Santa Monica Convention & Visitors Bureau, which
marked its 25th anniversary in 2007, is pursuing initiatives to
keep the local tourism industry strong.
It held the second Beach Summit in September and has developed a
service excellence course in cooperation with the City of Santa
Monica, the Santa Monica Chamber of Commerce and Santa Monica College.
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