By Ed Moosbrugger
June 26, 2009 -- Downtown Santa Monica hotels were expecting a tough year in 2009, and, so far, they have gotten exactly that. Both hotel occupancy and room rates have dropped sharply in Santa Monica, indicating that it will be a worse year than some industry watchers had predicted.
In the first two months of 2009, the hotel occupancy rate in Santa Monica dropped 15.5 percent to 67.9 percent, according to PKF Consulting, a hotel consulting service company. The average daily room rate fell 11.3 percent to $250.13.
Santa Monica’s visitor industry has been hit hard by a weak economy and fierce competition for the travel dollar. Savvy consumers have made it more difficult for hotels to maintain their rates.
“Americans continue to shop aggressively for value pricing when purchasing travel services,” said Peter C. Yesawich, chairman of Ypartnership, a travel marketing company.
But the outlook is not all bleak. Some hotels expect a good – although not great – summer, and there are some signs things may improve later in the year.
With the corporate and group markets hit particularly hard in the recession, some hotels will be targeting more of their marketing efforts at leisure travelers.
Ellis O’Connor, general manager of the Fairmont Miramar Hotel at Wilshire Boulevard and Ocean Avenue, said that his hotel is focusing more on the leisure travel market.
“We’re optimistic for the summer,” he said. “We believe the drive market will utilize Santa Monica” as people stay closer to home on their trips. But he doesn’t expect the hotel to match last summer’s very strong results.
“Purchasing power has shifted to consumers,” he said.
The domestic leisure travel outlook for the summer is “remarkably stable” in light of the down economy, said the U.S. Travel Association, which expects a 2.2 percent decline in trips compared to last summer. Americans plan to take more day trips or long weekend getaways instead of weeklong vacations, according to a survey by the U.S. Travel Association.
O'Connor also noted an encouraging sign.
“April was a good indicator for us,” he said. “Corporate [business] was 95 percent of last year. Maybe corporate America is beginning to travel again.”
At the Ocean View Hotel on Ocean Avenue, General Manager Robert Farzam said he is optimistic about the summer season.
“Occupancy and room rates are starting to kick back up,” he said. “I think the economy as a whole has already hit rock bottom.”
Farzam said the Ocean View Hotel will undergo an extensive renovation beginning late this year. The Farzam family also will break ground by early next year on its planned new, larger Travelodge on Ocean Avenue.
At the Ocean View, although occupancy is down about 5 to 10 percent, Farzam reported that the hotel still has high occupancy, aided by its position in the moderately-priced segment of the market. He added the hotel has been offering promotional rates of 20 percent off.
At the Hotel Shangri-La on Ocean Avenue, which reopened in December after an extensive renovation and restaurant opening, “we've been doing pretty well,” said Assistant General Manager Dino Nanni. “People were waiting for us to reopen.” The hotel recently opened a restaurant, The Dining Room at Shangri-La.
Occupancy has been good although May was a little slow, Nanni said.
Santa Monica should gain an advantage in the competition for visitors with the Centennial Anniversary of the Santa Monica Pier and the return of Cirque du Soleil to Santa Monica. Cirque will show Kooza next to the pier October 16, 2009 – December 20, 2009, and should highlight the area, said Karen Gay, global citizenship director for Cirque du Soleil.
O'Connor believes Kooza and the pier anniversary will boost local business by differentiating Santa Monica from other areas competing for visitors.
“We need it,” he said. “We need something to make Santa Monica different.”
The show will be a boon to local business in a normal off-season for the visitor industry, said Misti Kerns, president and CEO of the Santa Monica Convention & Visitors Bureau.
The Bayside District Corporation and Hotel Carmel took a proactive approach to boosting the visitor industry Downtown by sponsoring a reception in May for tour operators.
Five Downtown restaurants also participated, offering samples of their menus. The event was held at Wokcano. Other participating restaurants included Border Grill, i.Cugini, JiRaffe and Locanda del Lago.
The idea was to reintroduce the tour operators to what Downtown has to offer so they can know “we are here and eager for their business,” said Debbie Lee, director of marketing and communications for BDC.
“It is critical for us to re-establish relationships with these operators and encourage visitors to this area so we can begin to rebound from the economic turndown.”
