Southern California hotel owners struggle to fill more rooms this year – Orange County Register


Southern California hotel owners have struggled to fill more rooms this year, limiting their ability to raise room rates as costs rise.

According to CBRE Hotels’ semi-annual report on local hotel conditions, occupancy rates in the first six months of 2019 only increased in 12 of 31 hotel sub-markets monitored in the four counties covered by the Southern California News. Group. This may not be as alarming as it seems at first glance: Many local hotel markets have never filled so many rooms before, so it can be difficult to further improve occupancy rates.

However, the pressure on prices exists. First-half room rate increases were only seen in 19 of those 31 markets. This means that the key cash flow metric “RevPar” increased in only 15 submarkets.

The low numbers come as hoteliers have battled cost pressure in recent years, especially for the workforce who cleans rooms and serves guests. A measure of hotel compensation shows that weekly compensation for US industry increased 2.7% in 2019. And the producer price index for hotel supplies shows costs have increased at a rate of 3% in the first half of 2019.

“Hoteliers have been heroic in their efforts to find employees and fight rising wages. Market conditions indicate that hoteliers must pay the going rate of pay, or better, to meet their staffing needs. We don’t see this upward pressure on labor costs going away in the short term, ”wrote CBRE.

Here is how CBRE sees the performance of hotels in the largest geographic segments it follows …

Los Angeles County: Rates rose 0.01% to $ 212, increasing in 10 of 17 submarkets. Hotels were 83.07% full, up from 83.13% a year ago. The occupancy rate increased in six submarkets; seven had better cash flow.

Orange County: Rates rose 1.8% to $ 197, increasing in three of the seven submarkets. Hotels were 79.86% full, up from 80.38% a year ago. The occupancy rate increased in three submarkets; three had better cash flow.

Western Interior Empire: Rates rose 1% to $ 125, increasing in three of four submarkets. Hotels were 79.04% full, up from 79.35% a year ago. The occupancy rate has increased in a submarket; three had better cash flow.

Coachella Valley: Rates rose 1.1% to $ 220, increasing in its three submarkets. Hotels were 71.38% full, up from 71.28% a year ago. The occupancy rate increased in two submarkets; two had better cash flow.


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