Feb. 26–Hotel occupancy and room prices softened in the Long Beach-area market in January, due to continued effects of a new hotel near Long Beach Airport, according to a research firm and industry experts.
In the survey of Long Beach, Lakewood and Cerritos hotels, Smith Travel Research data show some softening in stays at hotels in the final three months of 2013, and a further decline of 4.7 percent in January, versus the same month in 2013, when it grew at a double-digit clip.
“The market is absorbing the Marriott out by the airport,” said Bruce Baltin, senior vice president of hotel consulting firm PKF Consulting USA in Los Angeles. “As the market absorbs the supply in the short term, demand continues to grow 1 to 2 percent a month.”
The 159-room Courtyard Marriott opened on Lakewood Boulevard nearly a year ago, on March 12.
“We’re certainly satisfied with our performance,” said Lucas Fiamengo, general manager of the hotel.
“When you add rooms to a market, it does change the mix,” said Fiamengo, who is seeing strength in leisure traveler stays due to his hotel’s proximity to freeways and Southern California tourist destinations.
The Long Beach-area market began to soften in October when the federal government shut down and slowed the number of government-paying travelers here. Overall, occupancy rates were essentially flat at 73.3 percent in 2013, but fell to 69.1 percent by January, according to the data provided by Smith Travel of Hendersonville, Tenn.
Occupancy is determined by rooms sold divided by rooms available and is always shown as a percentage of rooms occupied.
In 2012, occupancy rates stood at 73.1 percent, up 7.2 percent from 2011 levels.
After seeing double-digit occupancy rates fall precipitously in 2008 and 2009, the local hospitality industry began bouncing back. Forecasters say it’s too difficult to say if the fall in occupancy rates in January might be a precursor to a downturn as one month’s worth of data doesn’t make a trend.
“Occupancy is down because of new supply,” said Bob Rauch, president of R.A. Rauch & Associates Inc., which operates hotels in Southern California.
“Demand must increase or else there’s a challenge in the market,” Rauch said. “If the pattern continues another two months, with the softening in January, that could be a precursor of what is to come in 2014. The numbers don’t lie.”
Another key measure of the local industry’s health is revenue collected. The Smith Travel figures show a 3.3 percent decline to $81.68 per room in January. This compares to a rise of 18.3 percent to $84.51 per room collected in January 2013, according to the data.
The revenue figure, referred to as RevPar, is calculated by room revenue divided by rooms available.
RevPar fell dramatically going into the Great Recession. In 2009, RevPar fell 18.9 percent to $66.84 per room, down from $82.46 in 2008. In 2010, the recovery began locally as RevPar rose 2.4 percent to $68.45.
RevPar in 2011 and 2012 rose to $75.04 and $82.66, respectively, in the Long Beach area. RevPar rose to $85.50 last year, with Baltin and Rauch both forecasting continued growth into 2014 and beyond — even if more hotels are built, as has been rumored for in the business park surrounding the airport and downtown.
In a recent report, Baltin wrote that Long Beach continues to position itself as a regional destination, offering a vibrant downtown area, strong convention business and an alternative to other regional airports.
Long Beach still has room for plenty of lodging growth, Baltin said.
Contact the writer: pmaio@lbregister.com or 562-243-5497
