Last Year's Woes Still Vex Hotel Market

LOS ANGELES, CA-Sinking occupancy levels and declining room rates continued to vex the county’s hotel business in the first quarter of 2002, according to a new report, which says the combined effects of an economic slump and the Sept. 11 terrorism depressed the hospitality just as much in the first part of this year as they did last year.

Through the first quarter of 2002, the county’s occupancy has remained below 70% (66%), while average rates have declined by 15%, the report from HVS International says.

Brisk business in the entertainment industry has bolstered occupancy in some submarkets, the HVS report says, and Los Angeles has fared better than many other parts of California. But most submarkets continue to post year-over-year declines after a 2001 that was marked by what the report calls “”weakness unseen since the early to mid-1990s.” The report for the first quarter of 2002 resembles the full-year 2001 results in many respects. In 2001, occupancy in the Los Angeles area dipped to below 70% (66.8%) for the first time since the mid-1990s, when “the lingering effects of the Persian Gulf War, civil unrest, the Northridge Earthquake, and other natural disasters were finally relenting.”