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Renovations Signal Improved Outlook for Hotel Industry

Renovations Signal Improved Outlook for Hotel Industry BY JACQUELINE FOX Staff Reporter Corporate travel may still be limping toward pre-911 levels but occupancy and average daily room rates for 2003, coupled with projections going forward indicate that the Valley’s hotel industry has finally turned a corner. “The industry is definitely getting healthy again,” said Bruce Baltin, senior vice president of PKF Consulting. According to Baltin the Valley’s hotel sector ended 2003 with an average room occupancy rate of 68 percent, up from 66 percent in 2002. He said the industry is projecting occupancy rates across the Valley to climb to 70 percent in 2004. Leisure travel, said Baltin, has remained relatively stable the last two years, helping to offset the decline in corporate travel. But hotels have also had to bite the bullet and lower room rates over the last three years in order to compensate for the downturn. Those rates are now coming back in line with pre-911 levels, which dipped by 7.9 percent in 2001. Rates were only down by 4.5 percent in 2002 and improved to just a -1.8 percent in 2003. “No one is saying it’s going to be a boom, but we’ve definitely bottomed out and we are back on the other side,” said Baltin. According to PKF’s 2004 Southern California Lodging Forecast, room rates are projected to increase by another 2.2 percent in 2004, up to about $111 from $109 in 2003. The turnaround seems to be going hand-in-hand with scattered renovation projects now underway and a couple of Valley hotel sales in 2003. The Warner Center Marriott Hotel in Woodland Hills, for example, which was bought last year by Stone Levy LLC, is nearing completion of a significant overhaul of the majority of its public spaces, including a new lobby, bar and restaurant, and is reported to be remodeling one of its entire floors that was previously a conference and meeting space to make way for 13 more guest rooms. The hotel, which now has 476 rooms and 10 suites, has also added a full-service Starbucks coffee bar and five new meeting rooms. The renovations, according to the hotel’s General Manager, Victor Mills, will cost in excess of $3 million. “These are exciting times and we are happy to be on the verge of completing these much-needed renovations,” said Mills. “Part of what we are also seeing in addition to a return to corporate travel, is, after three years of slow activity in the industry, people are now putting long-deferred money into properties and completing long-haul renovations,” said Baltin. Mills said the because his hotel does not rely on traditional tourists markets, it has always managed to stay about 8 percent higher than average occupancy rates and he’s projecting increases this year of roughly 5 percent. Across the Valley, the Radisson Valley Center Hotel has changed hands,and names,and is putting the finishing touches on a compete renovation of the entire hotel that, when finished, will take the room count from 179 to about 203. The hotel is now a Courtyard by Marriott, and, says Chris Bold, who came on as general manager in spring of 2003, aims to offer a hip new option for both business and leisure travelers. According to Bold, the hotel, bought by Los Angeles-based Wolff DiNapoli, whose portfolio includes the Fairmont hotels in Santa Monica and San Francisco, was nearly demolished in the change over April 1. When construction is complete it will feature 205 guest rooms, up from 179 under the previous ownership, 19 new suites, a 300-square foot “business library,” complimentary high-speed Internet access in most public meeting spaces, a new restaurant that replaces the former Windows Bar and Grill, and a new lounge with an onyx backdrop and 42-inch plasma screen TV. “We’ve pretty much gutted the entire hotel and believe me, it wasn’t easy because we’ve been open through the entire renovation process,” said Bold, a professional chef who has taken charge of the restaurant (no new name yet) menu, a blend of what he calls “contemporary fusion.” Occupancy levels were at 70 percent upon the start of the renovations, now down to about 30, he said. But the company felt it was creating such a high-end product, it decided the falloff, if only temporary, was worth it. “This is going to be one rockin’ hotel,” said Bold. The facility is expected to have 83 of its new rooms open by the end of this week. Once the renovations are complete in April average daily rates will start at around $139, up from the former rate of $109, Bold said. Corporate rates will start at $159 during the week and $139 on weekends. “We’re in the homeward stretch,” said Bold.

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