By Ed Moosbrugger
January 13 -- In a sign of the times for the visitor industry, the Ocean View Hotel on Ocean Avenue in Santa Monica is promoting 2009 rates about 20 percent below 2008 levels in an effort to keep occupancy up.
General Manager Robert Farzam plans to keep this promotion going throughout the year, which he expects to be slow.
Not all Downtown Santa Monica hotels are being that aggressive with rates, but a flat to down year is expected in 2009 because of the weak economy worldwide.
“2009 is a correction year for the market,” said Ellis O'Connor, general manager of the Fairmont Miramar Hotel at Wilshire Boulevard and Ocean Avenue. “There is a lot of uncertainty going into the first quarter.”
O'Connor expects flat occupancy and a slight increase in room rates in 2009, with a slow first half followed by gains in the second half.
Industry forecasts see slight declines next year.
In a report released in November, PKF Consulting forecast a 2 percent drop in occupied hotel rooms for Santa Monica in 2009, with the occupancy rate dropping to 77.2 percent from an estimated 80.4 percent in 2008 and 81.6 percent in 2007.
The occupancy rate may also be affected by the reopening of the renovated Hotel Shangri-La, which was due to open in mid December.
The average room rate is expected to rise only 1 percent to $291.52 in 2009 compared with an estimated 3.6 percent gain in 2008 and 9.2 percent in 2007.
Business conditions have deteriorated since that forecast was released.
Misti Kerns, president/CEO of the Santa Monica Convention & Visitors Bureau (SMCVB), said in mid-December that she expects a 5 percent decline in business in 2009.
The visitor business has gone sluggish in Santa Monica following a very strong summer, which was aided by a weak dollar.
“After the film convention (American Film Market in early November) business has slowed down a lot,” Farzam said.
Santa Monica hotels had the most successful month on record in August, but things have changed since then, Kerns stated.
The Santa Monica hotel occupancy rate fell 2.4 percent in September and 5.9 percent in October from a year earlier, according to PKF. For the first 10 months of 2008, the occupancy rate dipped 0.3 percent to 83.2 percent and the average room rate rose 4.5 percent to $289.37.
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The weak economy and hassles foreign visitors face when traveling to the United States has hurt the visitor industry, Kerns said.
“While a weak dollar attracted visitors from abroad in 2007 and early 2008, some of our top international markets, such as the United Kingdom and Ireland, are also now affected by a poor economy and are traveling less to the U.S.,” Kerns said.
To help keep Santa Monica's visitor industry healthy, the SMCVB will join with its hospitality industry partners in more trade shows and face-to-face meetings abroad in some of its largest international markets, including Australia, United Kingdom and Ireland.
It also will continue to target the small corporate meetings and incentive market.
The Fairmont Miramar Hotel has held it’s own following a very strong summer, although there was a dip in the market and some pressure on room rates, O'Connor said.
Occupancy was up 10 percent in October from a year earlier, with gains of 5 percent in November and an estimated 4 to 5 percent in December.
O'Connor attributes the performance to a rejuvenated team at the hotel and extensive renovations, which give the hotel “a lot to shout about.”
A new restaurant will open in January.
The hotel will be looking to the drive market (people within about 100 miles) to shore up business in the first half of 2009.
Even though Santa Monica faces a slow year for its travel and tourism industry, its level of occupancy looks good compared with the nation.
PKF's national forecast for 2009 sees an occupancy rate of only 58.3 percent.
Business travel is being hit harder than leisure travel, according to the Travel Industry Association (TIA), a trade group.
“Although leisure travel is stable, business travel is projected to decline and the United States is likely to be hit hard by a further decline in international arrivals,” TIA said in a statement in late October.
It expects a drop of 1.3 percent in leisure travel in 2009 after a stable year in 2008. Business travel is expected to decline 2.7 percent in 2009, after a 3.7 percent drop in 2008.
Overseas travel to the United States is expected to fall 3 percent in 2009, TIA said.
Still, all is not lost.
“By no means is the sky falling,” said Suzanne Cook, senior vice president of research for TIA. “After years of growth, we're now looking at modest declines.”
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