Turbulent Times for Tourism

By Ed Moosbrugger

Oct. 9 -- The pain from economic uncertainty and travel cutbacks after 9/11 continued this summer for Santa Monica's tourism industry, but some hotel operators saw signs of recovery.

Experiences of individual hotels vary substantially, but most operators agree that times remain difficult. The picture remains confusing, partly because of the peaks and valleys experienced by some facilities this year.

Some hotels report declines in both occupancy and rates, but two industry surveys show that hotel occupancy is up slightly this year, while room rates are down.

But while Santa Monica is suffering, it seems to be holding up better than some other areas. It is, however, nowhere near the banner year of 2000.

"The hospitality industry is suffering," said Paul Hortobagyi, general manager of the Georgian Hotel on Ocean Avenue. "We are down here in the trenches. It's not good."

Sherry Kellogg, general manager of Hotel Carmel at Broadway and Second Street, said this is the worst year she has experienced in 16 years in the hotel business in Santa Monica.

"The numbers are not strong like Santa Monica has experienced in the past," Kellogg said. But there are some hopeful signs. "October, November and December are looking much, much better" for Hotel Carmel, Kellogg reported.

At the Best Western Ocean View Hotel on Ocean Avenue, general manager Robert Farzam said business this summer was better than he had expected.

"The summer went pretty well," he said, although it wasn't as good as last year. Although international business was off a bit, "we got a lot of Europeans," he reported. "I'm optimistic," Farzam said. "Hopefully in the next couple of years we will be back to normal."

Misti Kerns, executive director of the Santa Monica Convention & Visitors Bureau, doesn't expect Santa Monica to see tourism numbers as strong as in 2000 until late 2003 and expects the international market to lag until 2004 or 2005.

Kerns noted that Santa Monica lodging occupancy rates rose 4.9 percent in the first seven months of 2002, while the average room rate fell 4.6 percent, according to Smith Travel. PKF Consulting, whose report covers most of Santa Monica's major hotels, reported occupancy rates up 6.5 percent through June, but average room rates down 10.7 percent.

"It appears that the budget properties are doing fairly well,' Kerns said.

Hotels have to work harder than ever to attract business, especially in the face of increased price consciousness by travelers. Some Santa Monica hotels say their occupancy is okay, but they have really compromised on rates, Hortobagyi said.

"People have become very rate sensitive," said Kellogg, who believes domestic business is sustaining the Santa Monica lodging industry after a sharp drop in international business.

Hotel managers have become more aggressive in courting visitors. Farzam said he is doing more advertising in international magazines, now offers free continental breakfast and free local telephone calls and is promoting special winter rates.

Passenger traffic at LAX (down 17 percent in the first five months of 2002) indicates that more people are driving and probably staying less time, Kerns said.

That is bad news because "Santa Monica has historically marketed to the longer haul visitor, because they usually stay longer and spend more," Kerns said.

The Santa Monica Visitors Bureau is responding with an aggressive public relations campaign abroad, particularly targeting the United Kingdom, Australia and New Zealand, Kerns said. Efforts will include hosting visits by journalists, trade shows, sales presentations, direct marketing and Web links.

The bureau also will continue to work with its top domestic markets -- such as New York, Chicago and California -- in trade shows, site inspections, direct mail campaigns, and individual and group sales calls. The bureau will host more than 100 domestic tour operators in November with a city tour while they are in town for a large trade show in downtown Los Angeles.