The report shows Valencia and Santa Monica as the best-performing hotel submarkets for the first eight months of the year.
The average daily room rate in L.A. County slipped to $118.12 for the January-August period, compared with $120.66 at year-end 2001 and $122.34 at year-end 2000, according to Jordan Richman, a Grubb & Ellis senior vice president and author of the report.
The study, based on research by Grubb & Ellis and figures from PKF Consulting, shows occupancy actually edged up countywide to 68.55% by the end of August, compared with 68.36% at the end of 2001. However, the occupancy remained down from more than 76% at the end of peak year 2000.
"Business is certainly down in all areas of the economy and the hotel business has been most affected by this," Richman says in his report, but he doubts that the slide will push owners into selling their hotels.
"Most hotels, especially those that sold in 1998 or earlier, were bought at figures below the peak of 2000, so they are not hurting with respect to debt service," Richman tells GlobeSt.com. Although many prospective buyers are in the market, he says, most owners don't feel pressure to sell, even though gross daily revenue per 100 rooms has slipped to $8,097 from last year's $8,248 and $9,305 in 2000.
Richman points out that current conditions contrast sharply with those of the recession 10 years ago, when the number of hotels for sale far outnumbered the buyers.
"Owners are holding onto their properties because they don't want to sell them at wholesale prices," Richman tells GlobeSt.com. "There is a glut of money now that we didn't have 10 years ago."
Valencia is the best-performing hotel market in the county, Richman says, with a January-August occupancy of 87.2%, at an average rate of $93, a considerably higher occupancy than any other part of the county.
Santa Monica ranks next in occupancy at 78.7%, up from 74.5% last year, with an average room rate of $194.81 this year. The Santa Monica rate is down from $214 last year.
Richman attributes Valencia's performance to overall growth there and the emergence of many new businesses, while Santa Monica benefits from its beach-side location.
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