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Thursday, Mar 28, 2024

HOTEL—Occupancy Rates Remain Low at Many Valley Hotels

Most San Fernando Valley-based hotel operators say they are holding off on slashing room rates and implementing layoffs, but concede the attacks of Sept. 11 seriously sunk room occupancy levels, particularly in corporate travel categories. The hotel industry was already feeling the effects of a sluggish economy and declining tourism industry, but was preparing for its typically robust fall corporate convention season to help boost occupancy rate levels when the attacks occurred. Kathy Sheppard, vice president of corporate communications for the Beverly Hills-based Hilton Hotel Corp., said the company doesn’t publish occupancy rates, so she couldn’t quantify the drop for either the Burbank Hilton Hotel or the Hilton Universal City Hotel. Sheppard did say the Burbank and Universal hotels have received significant numbers of cancellations from guests planning to attend conventions, but most of those were for events planned in the latter half of the fourth quarter. “We’ve seen a lot of cancellations among individual business travelers for the short term,” said Sheppard. “But we don’t know what is going to happen in the long term because typically transient customers make their reservations between 24 and 72 hours of their stay. “So we think we are going to have a few crummy weeks and are looking at bouncing back again in about eight to 10 weeks; and that’s system-wide.” Sheppard said there will be staff furloughs at most, if not all, Hilton Hotels over the next few weeks, but until the company ascertains where the deepest declines in occupancy rates are, she couldn’t say where layoffs may hit. Hilton President Stephen F. Bollenbach said last week the publicly traded company would not meet Wall Street earnings forecasts for the fourth quarter, which had been put at 16 cents a share. He also said Hilton was putting on hold two new projects, one in Las Vegas and the other in Orlando, but would continue its planned $235 million renovation and expansion program for company-owned hotels. Sheppard said neither of the two Valley-based Hiltons were offering any special promotions or planning to slash room rates to attract more business. Occupancy levels at the Holiday Inn Warner Center for the month of September dipped by 8 percent over the same month last year, according to hotel general manager Shelley Buster. Those declines, said Buster, are mostly corporate cancellations and came primarily from international clients. “We have one operator that we work with that every year books a large corporate group for us here from Tel Aviv,” said Buster. “That group has cancelled, but for the most part those reservations we already had on the books are holding. So, while the drops aren’t expected to effect us long-term, we are being cautious because, remember, we had already seen a decline in our business travel sectors because of the economy.” Room rates remain unchanged and, so far, no layoffs are on the table, said Buster. John Duel, manager of media relations for the Los Angeles Convention & Visitors Bureau, said his agency would release a report later this week that will break out a region-by-region snapshot of the damage done to hotel occupancy rates over the last three weeks. Duel said occupancy levels for the month of September in 2000 were at 79 percent at most hotels in the San Fernando Valley. He said this year’s occupancy levels were already averaging about 4 percent below last year’s rates due to the economy. Analysts have predicted the attacks are likely to knock those figures into the 20- to 25-percent range. Wolf Walther, general manager of the Sheraton Universal Hotel, said occupancy levels fell to 30 percent the week of the attacks but are now climbing up toward the 50 percent levels. He said he met last week with Universal Studios executives to discuss promotions and special packages to generate business. “We had been a hotel that was very positive in relation to what was going on with the economy,” said Walther. “But this was very damaging to our occupancies, although they are very slowly improving and we haven’t really had any major cancellations.” New York-based Starwood Hotels & Resorts, which owns the Sheraton hotel chains, launched the first of 10,000 layoffs last week after reporting occupancy rates of as low as 30 percent following the attacks. The general aviation industry is still taking a beating because of on-going FAA restrictions on flying for non-instrument-trained pilots. But the new security measures at LAX and other commercial airports are helping to prop up the charter flight industry in and out of Van Nuys Airport, considered the world’s largest general aviation airport. That alone has helped bring occupancy rates at the Airtel Plaza Hotel at Van Nuys Airport back to near-normal levels after dipping to between 50 and 60 percent of normal the week of the attacks, according to the hotel’s owner, Jim Dunn. Dunn added that his hotel has remained relatively isolated from the damage being done to other hotels because his is not a large corporate convention facility, and the hotels that are likely to take the deepest hits are closer to downtown Los Angeles and Valley-based theme parks and tourist destinations. “Interestingly enough, the charter business is up because corporations see the benefits when you take into consideration all that is going on at commercial airports,” said Dunn. “So, as a result, room occupancy levels for our hotel are almost back to normal, or, let’s say, they are back up to acceptable levels now. There has been some shrinkage because we had some substantial numbers of Asian and European tours cancel reservations, but they are recovering.” Dunn did say the Airtel Hotel is laying off three workers, but that was planned before the attacks. He is not offering any special room rates nor is he planning any further cutbacks.

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