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As Executive Travel Returns, Hotel Occupancy Rises

Business travel is back and fueling an increase in hotel occupancy, room rates, investment and hospitality employment throughout the San Fernando Valley region. Three years after the recession brought business travel to a standstill, hotels are once again seeing a rise in executive travel. It’s helped push occupancy rates up about 5 percent from last year and 15 percent from the bottom in 2008, hotel managers said. “It’s the compression factor at work,” said Michael Newcombe, general manager of the Four Seasons Hotel Westlake Village, which ranked No. 10 on the Largest Hotels List. “After three years of having no meetings, companies are saying it’s time to get one in.” While the increase is most apparent among the biggest and most up-to-date properties, smaller hotels have a harder time competing. Still, the overall numbers are good and reflect a national trend of higher hotel occupancies and a return to profitability. Overall San Fernando Valley regional hotels saw a 4.8 percent boost in rooms sold so far in 2012, according to Smith Travel Research. Room rates are up 2 percent over 2011, when the average daily rate (ADR) was $102.59, the highest since the economic downturn, according to Los Angeles Tourism and Convention Board. The two numbers combined would yield an almost 7 percent increase in room revenues for 2012. Profitability is also up. A May national survey by PKF Consulting USA found that 72.3 percent of hotels across the country achieved a growth in profits in 2011. The average hotel saw profits rise 12.7 percent. “The good news is that the trend is not isolated to a select few property categories, but rather all hotel types were able to enjoy gains on the bottom-line,” R. Mark Woodworth, president of PKF Hospitality Research LLC said in a statement. Newcombe said business travel, along with some increase in leisure travel, has helped raise occupancy rates by 5 percent over a year ago at the 243-room Four Seasons, and 12 to 15 percent over 2008. Average room rates are up 20 percent overall, he said. The 420-room Sheraton Universal saw a 15 percent increase in business-related stays over last year, said Richard Reeves, director of sales and marketing. Business travel helped drive occupancy rates at the fifth largest hotel in the area to 73 percent as of April, up about 5 percent from last year, he said. For the last two years, he said, business travel consisted of consultants on stays lasting 3 to 6 months, probably visiting studios on downsizing projects, he quipped. That seems to be giving way to more general daily business travel, he added. Leisure travel is also on the uptick, he said, especially among AAA members. Reeves said that segment is up about 10 percent over last year, and he expects more with the opening of Transformers: The Ride 3D later this month. “That’s going to put (Universal Studios Hollywood) on the map once again,” he said. The ninth largest hotel on the List, the Embassy Suites – Los Angeles/ Glendale, newly built in 2008, also has seen an increase in revenue per available room year-over-year for the past three years, said Stephanie Mervine, director of sales and marketing. “This year we are enjoying a stronger corporate transient Average Daily Rate (ADR) as well as an increase in occupancy midweek compared to 2011.” She said growth is being driven primarily by business travel. Business travel also helped the seventh largest hotel on the List, the 305-room Hilton Woodland Hills/Los Angeles, boost occupancy rates to almost 80 percent from a low somewhere in the 60 percent range three years ago, said General Manager Francois Khoury. Executives on business for Northrop Grumman Corp., Farmers Insurance Group, WellPoint Inc., Bank of America and Amgen are traveling again, he said. In recent months, the consulting and auditing firm Deloitte has been taking about 1,000 rooms a month in the San Fernando Valley region, Khoury added. “They have a lot of auditing business in the area, so they’ve given us a lot of business,” he said. The rebound means Hilton is hiring again. Khoury said he’s added 30 people since 2008. “All the hotels in the area have started to hire again,” he said. The new business has also helped Hilton justify a big renovation project. He said the hotel is investing $20 to $30 million in a total makeover of the 25-year-old property on Canoga Avenue — both inside and out. Work is due to begin in November. “The whole building will get a facelift,” he said. “Wallpaper, furniture, bathroom tile, the restaurant, everything.” Download the 2012 LARGEST HOTELS list (pdf)

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