Sheatsley did acknowledge that there has been some erosion of rates and that some areas are improving more rapidly than others are. The sector hit hardest is the Downtown submarket, with Hollywood flat, Pasadena doing well and Santa Monica picking up.

The San Fernando Valley market is still struggling, and the Airport region has taken the greatest toll in room rate reduction, Sheatsley says. This is due to air traffic being off and the large question mark that looms over business travel budgets, he says. Over the last three months, however, LAX passenger traffic has been gradually improving.

Occupancy rates in Downtown are off 20% from the first quarter in the year before. While other submarkets in Los Angeles are relatively flat, Valencia has begun to tick upwards with a positive increase of 2% over the same period the year before. Signs are hopeful, according to Sheatsley, as the US Travel Sentiment Index, compiled by the Travel Industry Association of America, is beginning to show a small increase.