Local Lodging Able To Raise Rates Though Prices Remain Below Pre-Recession Levels
By Tiffany Rider - Senior Writer
December 18, 2012 - While several local hotel general managers report marginal increases in occupancy rates and the ability to slightly raise room rates in 2012, their expectations for the coming year are hopeful for an even better year.
Occupancy levels at five Long Beach hotels were up, albeit slightly, over 2011 numbers. Several factors may be attributed to occupancy rate increases – from more convention bookings to larger conventions, discounts offered by travel sites like Expedia and Travelocity, increased business at the Port of Long Beach, holiday travel and events happening in the city or region.
Renaissance Long Beach saw an increase of about 1.3 percent over last year, according to General Manager Nusrat Mirza. While it is difficult to say exactly how much occupancy levels rose year to year at the Hyatt Regency Long Beach – the hotel was under renovation for the first four months of 2012 – General Manager Stephen D’Agostino said the Hyatt experienced a spike in occupancy from May through the year.
Andrea Robertson, general manager of the Courtyard by Marriott Long Beach Downtown, did not say where occupancy levels were this year compared to 2011, but she expects “2013 to be stronger than 2012,” according to an e-mail. Another downtown hotel, the Holiday Inn Downtown Long Beach, is not a primary hotel for conventions. However, the hotel still saw occupancy rates up over 2011 by 3 to 5 percent, according to General Manager Sharon Bateman. “We mainly get overflow from the host hotels,” she said. “It has to be a fairly large group for our hotel to benefit.”
Among the hotels reached by the Business Journal for interviews, Hotel Maya General Manager Kristi Allen reported the highest year-to-year occupancy increase at 6 percent. Beyond downtown, the Holiday Inn Long Beach Airport reported a small occupancy hike in 2012, “primarily due to increases in discounted transient business from third party websites,” General Manager Robert Smit said in an e-mail.
Most hotels were able to raise room rates, including a four percent rate increase at Hotel Maya and a 10 percent increase at Holiday Inn Downtown Long Beach. According to Smit, the average room rate at the Holiday Inn Long Beach Airport was up slightly this year, though both occupancy and room rates are still well below the hotel’s peak levels in 2007 and 2008.
D’Agostino reported a slight boost in rates at the Hyatt Regency Long Beach, likely attributable to the renovation in the first quarter of 2012. “However, based on getting the additional occupancies and what we’re seeing with the marketplace, we haven’t seen it grow as much as ownership would have liked,” D’Agostino said.
Renaissance Long Beach, however, was unable to increase rates this year. They remained flat compared to 2011, according to Mirza. “People come to Long Beach for one of two reasons,” he said. “Either they come to a convention at the center or they come to do business in the Port of Long Beach. There’s not as much leisure business here.”
Room rates at many hotels will likely continue to rise with economic improvement and increases in operating costs. “Operating costs have increased substantially in 2012 due to increased costs of goods, amenities and energy costs,” Smit said. “Operating costs will continue to increase in 2013. Competition remains fierce in the greater Long Beach area and beyond as the Southern California market slowly recovers.”
To remain competitive, lodging executives and staff work to both maintain and keep décor and amenities fresh and hip for new guests and returning visitors. Hotels in Long Beach are no different. This year, Hotel Maya introduced a brand new fitness center and a 6,000-square-foot beach “complete with fire pits, beach furniture and a beach bar,” according to Allen. Though no significant renovations are scheduled at the hotel in 2013, Allen said 2014 will likely include room remodels “to keep our boutique style rooms relevant.”
The Hyatt Regency Long Beach is under renovation again through February, according to D’Agostino. Renovation of the first floor meeting space began in November. The hotel pool renovation was completed in the fall, expanding the pool deck to host outdoor events such as the VIP reception for this year’s Long Beach Marathon. “In January we’ll have music one night a week and make it another venue for Long Beach,” D’Agostino said. Mid-2013 renovations include a new fitness center, followed by a remodel of the entire lobby and some of the front driveway.
Based on when it gets the proper permits, Holiday Inn Downtown Long Beach will begin improvements to its public areas in the spring. The hotel renovated rooms last year. Renaissance Long Beach renovated in 2007, 2008 and 2010, and has begun further renovations this quarter. According to Mirza, the hotel is updating its fitness center to include equipment with touch screens connected to the Internet.
Courtyard by Marriott Long Beach Downtown is completely renovating its restaurant in early 2013, to reopen in spring next year, according to Robertson. “We expect the new restaurant concept to lure both our hotel guests and local diners alike,” she said. “With the addition of an executive chef, our special events menus will be completely revamped as well. We are looking forward to adding some great new value for our customers in 2013 and beyond.”
Looking ahead, several local hotels agree that 2013 is shaping up to be a better year. Though the Holiday Inn Long Beach Airport saw a decrease in demand in this fourth quarter, Smit said he remains hopeful that 2013 will improve. “We are projecting 2013 revenues to be marginally better than 2012 but still not to the peak of 2007 or 2008,” he said. “Our overall prices will increase in relation to increases in our operating costs.”
D’Agostino said 2013 is a strong year on paper so far, and Hyatt Regency Long Beach hopes to capitalize on that. “People who come to Long Beach realize a lot has happened here in the past few years, and they want to come back,” he said. “ They see the enhancements. It’s going to drive business to solidify the future. The more that we can bring people into the city, we can make this the place to be.” He also expressed his gratitude to Long Beach Convention and Visitors Bureau (CVB) President Steve Goodling and the CVB team for bringing business into the city.
Renaissance Long Beach should have a better year in 2013, according to Mirza, though remaining competitive is a challenge. “We do have strong advance bookings right now. That is a good indicator for an increase in business, but our expectation is to grow room rates in 2013,” Mirza said. “If you look at Long Beach, our pricing structure is still below what it was in 2008. We really have to find a way to attract conventions and guests. It all depends on how the corporate world travels. When they travel more they stay in our hotels more.”
Measure N, the local living wage measure passed in November that requires hotels with more than 100 rooms to pay hospitality employees a minimum of $13 per hour (and other benefits such as automatic two percent annual pay increases, five days sick pay, etc.), is going to have a huge impact on bottom lines based on the number of employees at a given hotel. At Holiday Inn Downtown Long Beach, Bateman said this new requirement will result in “some issues with revenue.” She expects a 3 percent increase in business in 2013 at most.
“We won’t be able to raise prices to compensate for that,” Bateman said. However, she is excited about what the living wage will do for her staff. “It’s going to give us an opportunity to draw in really good staff because of what we can provide,” she said. “It’s unfortunate [for the bottom line], but we can have the best employees in the area.”
Most hotel general managers have remained tight lipped on their plans to address the living wage measure, whether its reducing staff, having more part-time staff, reducing rooms, increasing room rates or a combination of several items. Last week, the Golden Sales Best Western laid off all its employees and planned to rehire some under a new corporation. (See our Newswatch article on this topic.)
“According to the Mayan Calendar, the world as we know it ends on December 21st,,” Allen said, “and with the passing of Measure N going into effect on the 21st, we don’t really know what will happen next.”