Econowatch

San Fernando Valley hotel room rates are continuing to rise in 1999, but at a slower pace than the 8 percent to 10 percent average annualized rate of 1998. The average nightly cost of a hotel room was $109.12 in March, up 5.3 percent over the like period a year ago, according to PKF Consulting, which tracks the hotel industry. While slower than the 1998 pace, the rise in Valley hotel room rates was still above the 3.5 percent March rise for hotel room prices in L.A. County as a whole. “Hotels are still afraid of a recession,” said Melissa Mills, a PKF researcher. “(Room rates are) just not rising as fast. But there’s still moderate growth.” Meanwhile, the average Valley hotel occupancy rate dropped to 76.2 percent in March, down 2.5 percentage points from the like period a year ago. Occupancy in the upper 70 percent range is considered favorable. Mills attributed the March softness to financial trouble in Latin America during the fall of 1998, when many groups cancelled springtime trips and conventions. But those cancellations were not enough to keep room rates from rising, as local hotels took advantage of consistently high occupancy levels and even higher rates in other destination cities, such as New York and Chicago. The average nightly room rate for L.A. County as a whole during the first quarter, at $115.41, remains above last year’s level by 4.6 percent. West Hollywood hotels saw the biggest jump in room rates, with the first-quarter average of $179.31 up 8.1 percent from the year-earlier period. Meanwhile, the average first-quarter rate for a downtown hotel room, at $77.05, was 2 percent less than a year ago.