DTLA Hospitality Ready for a Strong 2016

LOS ANGELES—The hospitality sector in Downtown Los Angeles is booming. According to the latest DCBID report, hotel RevPAR is up 7% year-to-date to an average of $151.17, and hotel average daily rates are also up 7% to an average of $195.76. This growth is being driven by both increased tourism and business travel, and as a result, hotel development is also up. The same DCBID report shows that there are 2,515 guestrooms currently under construction and an additional 2,360 proposed hotel rooms in the pipeline.

"Downtown's location has always made it an ideal base from which to explore Los Angeles. Now that it has become a destination in its own right, especially when it comes to dining and nightlife, it has almost become the obvious place for tourists to stay while in L.A.," Carol Schatz, the president of the DCBID, tells GlobeSt.com, noting that Los Angeles in general is seeing record-setting numbers of tourists and that many of them are using Downtown Los Angeles as their base to explore the city. "Much of the growth has been in the hip boutique hotels, which cater to younger leisure travelers and business travelers in the more creations fields."

Two years ago, Schatz called for more hotel rooms in the city, saying that the market was short by 4,000 rooms. Although there are currently nearly 5,000 potential rooms in the pipeline, Schatz says that the market still won't fill the demand. "We still need significantly more inventory, particularly in the larger convention-serving, 1000-plus room hotels, but what we are seeing now is extremely encouraging—with lots of smaller/boutique projects across Downtown," says Schatz. "The expectation is that large hotels will be developed along with the convention center expansion, and in the meantime you have a boom in fashionable boutique and mid-size hotels, along with a few big ones like the Hotel Intercontinental at the Wilshire Grand Center, which will have 900 rooms." The latest hotel development announced is the Sydell Group's plans to build a new NoMad Hotel at Gianninni Place, which will bring an additional 241 rooms to the market.

With the surge of development, Schatz expects that the sector will continue to perform well in the coming year. "I expect continued growth in terms of hotel revenues and visitors," she says. "There are currently several new projects in the pipeline, but most will not open until late in the year or in 2017."