Expect Rates to Drive San Diego RevPAR Growth Next Year

Hotel occupancy rates are officially in the 80% range in San Diego, up 1.4% over last year, according to research from RAR Hospitality. This year, RevPAR was up 4.1%, driven mostly by hotel rate gains. With occupancy already running high, next year, RevPAR gains—expected to increase 2.5%—will likely all come from rate gains with no growth in occupancy. Still RevPAR is expect to grow through 2019 in San Diego.

“It is really hard to get occupancy over 80%,” Bob Rauch, CEO and founder of RAR Hospitality, tells GlobeSt.com. “Once you hit that high 70% and 80% range, you have to have an occupancy that performs well every single month. San Diego still have a very powerful summer season, but it is not perceived as the place to go for the winter. San Diego is also a 55% leisure market. Once we hit that high 70% and 80% range, it is going to be all rate after that to drive RevPAR growth.”

The San Diego hotel market is dynamic, with several demand segments. The market has a strong group market that has grown from 800,000 rooms to more than 1 million rooms per year—which Rauch says is at full occupancy for the market. “The group market is still extremely robust, and with an expanded convention center in the long term, that sector can grow,” he says. “At the moment, it is maxed out.” San Diego also has a strong and growing leisure market, thanks in large part to activity from amateur sports teams. “We have a lot of fields and incredible year-round weather,” adds Rauch. San Diego also recently secured a daily direct flight from Japan, which has helped to grow the leisure market, and Rauch is hoping for a direct daily flight from Beijing, which would have a significant impact on the market.