Hotels in the region are outperforming recovery expectations, spurred by the continued rollout of COVID-19 vaccinations and an increase in vacationing guests, though a full industry recovery isn’t expected for two or more years.
“We are increasingly optimistic about the pace of lodging recovery,” Jeff Lugosi, executive vice president and practice leader of Hotel Advisory at CBRE Group, said in a statement. “Although fundamentals remain well below their 2019 peak, we are seeing a pick-up in current trends and solid improvement in leading indicators of travel demand.”Properties on the Business Journal’s list of Hotels have seen early indications of the recovery. Tahir Mian, who owns the Hilton Garden Inn in Calabasas, No. 32 on the list, as well as other hotels in Camarillo and Oxnard, called 2020 “a tough year.” Each of his three hotels lost millions of dollars during the closures, but Mian took the down time to renovate his Calabasas hotel and push forward on building a new confererence center in Camarillo.“Last year was a tough year, no question about that,” he said. “We knew we have to adjust and we could not keep on doing business the way we were doing it before. … You know, you have to roll with the punches. And the market was different. We as businesspeople, we have to adjust to the times.”Though Mian’s Homewood Suites by Hilton location in Oxnard has almost returned to pre-pandemic levels of occupancy, his Hilton Garden Inn in Calabasas has been slower to recover, with occupancy currently closer to 55 percent. The nightly rates at all his hotels are about 35 percent lower than pre-pandemic pricing.Mian said his Oxnard hotel’s proximity to Port Hueneme Naval Base as well as new construction of a nearby warehouse by Amazon.com Inc. helped boost occupancy close to 90 percent once restrictions were lifted in January, up from being largely empty during the last year.
“Upper-priced properties will see faster growth in 2021 fueled by easier comparisons and an uptick in business and leisure travel. However, occupancy levels still will trail those of the mid- and lower-tier properties,” Rachael Rothman, head of hotels research for CBRE, said in a statement.The Business Journal’s list gained a new hotel this year with the opening of Residence Inn by Marriott Los Angeles Glendale in October. The 147-room mission style hotel has 190,000 square feet across five stories. It ranks No. 31 on the list.Plenty of vacancyCBRE forecasts that occupancy in the greater L.A. market will outperform average occupancy levels at 56.7 percent during the first half of the year, compared to the national 43 percent projected average. Revenue per available room is expected to climb by 16.6 percent this year to $70.46 and occupancy is expected to be back to 79.1 percent in the greater L.A. region by 2024.“There’s a three-tier sort of hierarchy that hotels use for having business being fully open. One is for tourism, for individual family stays. Then the next is for (business) meetings, which will open on June 15, that was the big announcement this week,” Pete Hillan, a spokesperson for the California Hotel and Lodging Association said, referencing Gov. Gavin Newsom’s plan to fully reopen the state economy by mid-June. “Then, the next ones up are conventions, which are, as you know, very large gatherings. For the state right now, they’re anticipated to come October.”Revenue per room levels will return to 2019 averages by 2024, according to CBRE’s forecast. In general, properties that operate in the lower-priced chain-scale segments will recover sooner than the higher-priced hotels.The combination of permanent closures and fewer projects starting construction means the number of hotel rooms will grow just 0.9 percent for the year, according to CBRE. The reduction in the traditional lodging supply is one factor supporting enhanced lodging performance in the second half of this year, as CBRE estimates supply growth will remain below 1 percent through 2023.Meanwhile, local hiring in the industry has begun to increase in preparation for the June 15 full economic reopening of the state. The 6,000 hotels represented by California Hotel and Lodging Association provided about 235,000 hospitality jobs in the state prior to the pandemic, with more than 122,000 still laid off since last March. As of February, the Los Angeles area alone had more than 7,700 new postings for jobs within the hospitality sector.“We think it’s going to be a slower ramp up than you expect – it’s not going to be a light switch,” said Hillan. “Our general forecast, up and down the state, varies a little bit by market to market. Our business won’t really return to pre-pandemic until 2024.”
Hotels Take First Steps on Slow Road to Recovery
