The hospitality business these days is a little like having a good vacation location is everything. The declining value of the U.S. dollar against the euro has generally been a boon for tourism, but in the greater San Fernando Valley area, those reaping the benefits are those well positioned in locations that already attracted a significant number of international visitors anyway. “Our forecasts tell us that international travelers will account for between 10 percent to 20 percent more business in 2005 against 2004 for Southern California as a whole due to the exchange rates,” said Robert J. Feist, vice president at Atlas Hospitality Group, a consultancy in Costa Mesa. “The San Fernando Valley area does not expect to see a large increase in international travelers and the numbers should fall at the lower end of that estimate. This is due to the fact that it is not a destination location for those travelers.” The euro currently buys about $1.30 worth of American goods and services, up from $1.20 last year. Those rates have sent European travelers packing for points American. But the bargain prices they find are not changing their choice of destinations. So the places tourists have traditionally visited are still the same places they are visiting now. In the Valley, Universal Studios and Six Flags Magic Mountain have both seen increased business from international tourists, as has Sheraton Universal and even Sportsmen’s Lodge, which is nearby in Studio City, thanks to the deals now available to Europeans because of the dollar’s slide. “I think we certainly see the return of the European and Japanese traveler,” said Wolf Walther, general manager at the Sheraton Universal who declared this the year of the return of international business. “I think it’s to everyone’s benefit in the region.” Double digit increases Sportsmen’s Lodge, which specializes in hosting tour groups from Britain during the months of April and May, has seen its bookings attributable to international visitors rise by about 20 percent in the first quarter of 2005 compared to the prior year. “Last year during the first quarter, we sold 439 international room nights, and had a slight increase up to 532 in the first quarter this year,” said Rosie Martin, the hotel’s controller. In addition, the hotel’s wholesale business, international bookings that come from third-party companies like Expedia.com, rose to 132 room nights in the first quarter of the year versus no such bookings in the first quarter of 2004. According to LA Inc., the Los Angeles Convention and Visitors Bureau, the area’s tourism industry should see international tourists rise by 6 percent overall this year, with a large portion of that increase coming from visitors in Europe and other countries outside Mexico and Canada. Many of the players in the hospitality industry have already moved to capitalize on the potential offered by the weak dollar, tying in with third party companies like Travelocity and Orbitz as well as Expedia, and making their own websites available in the languages of the countries they wish to target. “We have experienced an increase in international business,” said Gary Rohanna, general manager at Loews Beverly Hills Hotel. “We don’t track it by specific region, but our marketing efforts worldwide include translating our website into various languages to attract tourists from Japan, Mexico and Europe. Our marketing company tells us that those efforts are paying off based on how many hits become reservations.” But while some of the Valley’s tourist destinations and hotels are experiencing a similar uptick, others are not. One hotel operator even thinks the Valley location may be working against the industry. “We’ve suffered from an international market standpoint,” said Sean Roach, general manager at Hilton Garden Inn in Valencia. “Because of the strong euro, travelers from Europe are hitting the bigger vacation spots, like Tahoe. Young couples can afford more expensive destinations, and that’s where they’re going.” Roach says that whereas approximately 7 percent of his hotel’s business usually comes from foreign visitors, this year it’s down to 2 percent, as Europeans eschew destinations like Magic Mountain for Tahoe, Aspen and others. Softness in Japan The Valley’s location isn’t the only thing standing in the way of the bright international outlook. Much of the area’s international tourism has traditionally come from Japan, and the Japanese are not finding the same benefits from travel to America that the Europeans encounter because of their currency. “There hasn’t been more than our usual numbers, as far as I can see,” said NBC Studios Burbank Tour Coordinator Chris Jivan. “About 25 percent of our guests are foreign tour groups, mostly Japanese, and we haven’t had any increase.” Japanese tourism is also the reason officials at Sportsmen’s Lodge are not especially sanguine in their full-year business projections, the recent spike in business notwithstanding. “We’re starting to see some improvement, but overall, we’re still losing a lot of our Japanese business to downtown,” said Steven Scheck, general manager at Sportsmen’s Lodge. “After 9/11, downtown suffered so much loss of international visitors and convention business that they started to undercut us in room rates. They’ve gone up a little as downtown improves, but I still can’t match their rates.” Hotel occupancy rates in the Valley area are in line with rates throughout L.A. at 72.6 percent, compared with 72.7 percent for all of L.A., according to LA Inc. Some of the increase in business from Europe, it seems, is being offset by other dynamics, a continuing weakness in the Japanese economy as well as new visa requirements making it more cumbersome to travel to the U.S. “Japan and some of its neighbors have been in a recession for the last several years,” said David Iwata, marketing and tourism outreach coordinator for the Economic Alliance of the San Fernando Valley. “That, combined with stricter State Department regulations, may be causing a delayed reaction to the favorable exchange rates for foreign travelers.” Challenges to international tourism have prompted LA Inc. to take an aggressive role in promoting tourism to the area, with programs like a “travel academy,” where they join forces with UCLA to bring top travel agents to Los Angeles for the purpose of educating them on how to best sell L.A., as well as a recent campaign that ran in Tokyo and Osaka subways featuring celebrities promoting a website for Japanese travelers to Los Angeles. Los Angeles City Councilwoman Wendy Greuel expects shortly to propose a plan to fund better marketing of the Valley as an international destination. Greuel would like to see an adjunct office of tourism, specific to the Valley, that would coordinate with LA Inc. but operate separately. “I believe the Valley offers entertainment and film attractions museums, shopping, dining and quality hotels that we need to be able to encourage tourists to visit,” Greuel said.
International Business Boosting Some Hotels