DTLA Hotel Activity Begins to Return

The hotel market in Downtown Los Angeles rebounded in the second quarter after a cool 2016. More than 1,150 hotel rooms came on line, according to the second quarter report from the Downtown Central Business Improvement District. Despite the deliveries, hotel room occupancy rates held strong, with occupancy at 79.8% year to date, a near 1% increase over last year. The average daily rate also increased to $219.32, an increase of 3.4% year-over-year.

“With all of the attention being paid to the convention center and the fact there is a deficit with regard to the number of hotel rooms that we have, it is not surprising that the hotel segment leapt off the charts,” Carol Schatz, president and CEO of the Downtown Central Business Improvement District, tells GlobeSt.com. “I think a lot of the activity has to do with the convention center and the number of people that are coming downtown as a result of the growth.”

In the second quarter, the 900-room InterContinental Los Angeles Downtown opened, along with The Sydell Group's 250-room Freehand Los Angeles. These were big deliveries for the market, but Schatz says that it is just the beginning. Major projects that are either already under construction or near ground break”ing are also delivering, and each have a hotel component. “If we look at the big projects that are coming our way, like Oceanwide, each of them calls for a tower of several hundred rooms,” says Schatz. “So, from my perspective, this was a resurgence. This was the third or fourth leg of the stool that started to come back to life once we saw life in the residential markets. Office and hotel are the last two legs of the stool, and took the longest to really show growth.”

During the first quarter, the retail market rebounded with substantial leases and increase in rental rates. Schatz says that hospitality and office are the final segments to the renaissance. “Downtown Los Angeles is the last great urban frontier in this country, and this is the second largest city in the country,” she says. “Like the rest of L.A., Downtown Los Angeles is a big place. We have room for hotel growth, and people that have experienced the revitalization of other neighborhoods saw the potential here, given the size of the city.”

The hotel market in Downtown Los Angeles rebounded in the second quarter after a cool 2016. More than 1,150 hotel rooms came on line, according to the second quarter report from the Downtown Central Business Improvement District. Despite the deliveries, hotel room occupancy rates held strong, with occupancy at 79.8% year to date, a near 1% increase over last year. The average daily rate also increased to $219.32, an increase of 3.4% year-over-year.

“With all of the attention being paid to the convention center and the fact there is a deficit with regard to the number of hotel rooms that we have, it is not surprising that the hotel segment leapt off the charts,” Carol Schatz, president and CEO of the Downtown Central Business Improvement District, tells GlobeSt.com. “I think a lot of the activity has to do with the convention center and the number of people that are coming downtown as a result of the growth.”

In the second quarter, the 900-room InterContinental Los Angeles Downtown opened, along with The Sydell Group's 250-room Freehand Los Angeles. These were big deliveries for the market, but Schatz says that it is just the beginning. Major projects that are either already under construction or near ground break”ing are also delivering, and each have a hotel component. “If we look at the big projects that are coming our way, like Oceanwide, each of them calls for a tower of several hundred rooms,” says Schatz. “So, from my perspective, this was a resurgence. This was the third or fourth leg of the stool that started to come back to life once we saw life in the residential markets. Office and hotel are the last two legs of the stool, and took the longest to really show growth.”

During the first quarter, the retail market rebounded with substantial leases and increase in rental rates. Schatz says that hospitality and office are the final segments to the renaissance. “Downtown Los Angeles is the last great urban frontier in this country, and this is the second largest city in the country,” she says. “Like the rest of L.A., Downtown Los Angeles is a big place. We have room for hotel growth, and people that have experienced the revitalization of other neighborhoods saw the potential here, given the size of the city.”