L.A. ho­tels at­tract­ing more guests, in­vestors

Af­ter a dev­as­tat­ing re­ces­sion, oc­cu­pancy is up and buy­ers are step­ping for­ward.

Los Angeles Times - - Business - Roger Vin­cent

Ho­tel own­ers across the coun­try took a thrash­ing dur­ing the re­ces­sion as oc­cu­pancy, room rates and val­ues plunged, but in­vestor in­ter­est in Los An­ge­les inns is bounc­ing back as the mar­ket be­gins to re­cover, ac­cord­ing to a new re­port.

In­vestors spent $154 mil­lion to buy ho­tels in Los An­ge­les County through Au­gust of this year, four times as much as was spent in all of 2009, ac­cord­ing to bro­ker­age Jones Lang LaSalle Ho­tels.

Buy­ers are look­ing for bar­gains, of course. The largest group of ho­tel sell­ers in the cur­rent cy­cle has been “spe­cial ser­vicer” com­pa­nies that deal with prob­lem mort­gage se­cu­ri­ties and len­ders that fore­closed on prop­er­ties acquired dur­ing the mar­ket peak be­tween 2006 and 2008.

Sales this year in­cluded L’Er­mitage in Bev­erly Hills for $45 mil­lion, the Mar­riott Los An­ge­les Down­town for $63 mil­lion and the nearby Hil­ton Check­ers for $46 mil­lion. Ho­tels on the mar­ket in­clude the Sher­a­ton Uni­ver­sal in Uni­ver­sal City and the Sher­a­ton Del­fina in Santa Mon­ica.

The hos­pi­tal­ity in­dus­try mea­sures suc­cess in terms of rev­enue per avail­able room — RevPAR, as it’s known — de­ter­mined by mul­ti­ply­ing a ho­tel’s oc­cu­pancy rate by its av­er­age daily room rate. Los An­ge­les’ RevPAR rose 6.3% dur­ing the first seven months of the year, nearly dou­ble the na­tional av­er­age of 3.3%. Most of that came from an in­crease in oc­cu­pancy as room rates have barely ticked up.

“The first wave of re­cov­ery in the last six to nine months has mostly been oc­cu­pancy in the tran­sient sec­tor — cor­po­rate travel and leisure trav­el­ers tak­ing ad­van­tage of deals,” said John Strauss, man­ag­ing di­rec­tor of Jones Lang LaSalle Ho­tels.

Innkeep­ers in a few pop­u­lar mar­kets such as New York, San Fran­cisco and west Los An­ge­les County have been able to in­crease room rates, but prices are pro­jected to hold steady in most desti­na­tions for al­most an­other year.

“We’ll see ag­gres­sive rate growth in mid-2011, 2012 and 2013,” Strauss said, as over­all de­mand for rooms grows.

Los An­ge­les is one of the largest and most di­verse lodg­ing mar­kets in the world, Jones Lang LaSalle said, with more than 98,000 rooms in al­most 1,000 prop­er­ties.


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