Business & Economy

Hotels = bright spot in Southern California economy

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A new report suggests tourism may be one bright spot in Southern California’s economy.

Cal Poly Pomona and L.A.-based PKF Consulting released the 2012 Southern California Lodging Forecast in Anaheim.

The report shows hotel occupancies and room rates are inching up in the Southland.

Southern California’s tourism industry has spent the past few years weathering the bad economy. As unemployment levels grew and consumer confidence fell, people started reeling in their spending.

That meant fewer hotel stays. But this year’s Southern California Lodging Forecast suggests that the worst is behind the local tourism industry.

"Lodging numbers are up over 5 percent increase in occupancy in the state this year through September," says Dan Mishell. He's with the California Travel and Tourism Commission. "Revenue per available room is up 11 percent. So tourism is actually outperforming the rest of the economy."

Mishell says that means more jobs. He says in California, leisure and hospitality employment grew by 2.7 percent through September of this year while non-farm employment’s up a little less than 2 percent.

Bruce Baltin of PKF Consulting helped compile the lodging forecast. He expects the occupancy rates and room prices to continue to increase. Baltin says Southern California’s been lucky because its tourism industry can’t add many more hotel rooms because there’s not enough space, so it’s not just about demand.

"We’ve always had very limited supply growth in Southern California because it’s hard to build in, it’s an area that’s, you know — it’s just tough to find sites," Baltin says. "And in the most desirable areas of Southern California, we’ve had limited supply growth in the last 20 years. And the demand fluctuations have been there, but we’re kind of insulated from the, let’s say, volatility of the national financial markets, because of the limited amount of supply."

Baltin says the other factor that’s helped Southern California’s tourism industry is the weak U.S. dollar, "and also the strength of some international economies. Australia, for example, is now the number one overseas arrival market in Southern California. That was never the case before. That was very much a surprise. And then you’ve got strong growth in China and Korea, which is not a surprise — but strong growth from a relatively low base."

Officials say the number of international visitors flying into California airports has been up double-digits for the last two years. The California Travel and Tourism Commission says international visitors spent $17 billion in the Golden State last year — more than the value of the state’s top four export categories combined.

Charles Ahlers of the Anaheim/Orange County Visitor and Convention Bureau says his organization has been spending a lot of money on marketing to get people to come to Orange County. But he says Anaheim has its own ace in the hole when it comes to tourism: Disney.

"Disney’s a giant corporation with huge investments and they protect their investments by getting the word out," Ahlers says. "And with the billions of dollars that have been invested in California Adventure and the opening of World of Color and Cars Land coming in next summer, they’re going to spend a lot of money promoting those attractions and we get to ride on their coattails. We’re lucky."

But Ahlers says the competition between L.A., Orange County and San Diego for convention traffic is another matter. He says the recession has really hurt that.

"For the last three years, we’ve seen meetings start to get back to where they were, but the corporate spending at the meetings wasn’t as good — I mean, the parties and the meal functions just were smaller, so we were losing that part of the economy," Ahlers says. "And now it’s starting to change a little bit and we’re seeing people, companies like Microsoft come to town and actually spend, you know, a good amount of money on food and entertainment that they hadn’t done in a couple of years."

That's what Southern California’s travel and tourism experts expect to continue over the next year or two — filling hotel rooms and pumping more tourist dollars into the local economy.