LOS ANGELES-The number of hotel sales and the price per room both rose dramatically in 2004 at the same time as the long sluggish Downtown market awakened, trends that are likely to continue in 2005. The market’s performance bodes well for the rest of the region, according to Alan X. Reay, president of Costa Mesa-based Atlas Hospitality Group, who tells GlobeSt.com, “Los Angeles is a great barometer for the rest of Southern California.”Full-year figures are not available yet, but the latest surveys by Atlas show that the number of hotel sales rose by 28% to 41 and the median price per room increased by 37% to $63,000 as the dollar volume grew by 134% to reach nearly $445 million. In many respects, the county is approaching or surpassing record sales and pricing marks that were established in 2000 and Reay expects 2005 to continue the record performance. Atlas projects that the number of hotel sales will grow by 10% and the median price per room will rise by up to 15%, for what will amount to a combined increase of nearly 50% in the median price in the past two years.Among the factors driving the hotel industry recovery is international travel, which is rising in part because of the declining dollar and the strength of international currencies, along with travelers feeling safer about moving around the country. In 2005, Reay estimates, the international market for business and leisure travelers combined will approach the record level of 67 million passengers that passed through Los Angeles International Airport in 2000. The number of travelers passing through LAX will total about 60 million for 2004, he says, up from 55 million in 2003.

Along with the travel boost, he cites other factors for the dramatic improvement in Downtown’s hotel market in 2004: “Downtown Los Angeles had been one of the poorest performing market in Southern California until this year, but 2004 has been a turnaround year because of the redevelopment and revitalization of the Downtown area because of the effects of the Disney Concert Hall and numerous other projects,” Reay tells GlobeSt.com. Another factor is “the bullish outlook of investors, who have paid some record prices for Downtown hotels as well as other commercial properties.” Atlas expects 2005 to be a very strong year for Downtown, with an increase in conventions and a gathering momentum that will be produced by the new 1,200-room hotel project near the Staples Center.Another factor that materialized in the hotel market this year was the trend toward conversion of some hotels to condominiums, the effects of which have yet to play out. But the trend has already helped to push prices up in Downtown L.A. and Century City with the news that the Checkers in Downtown and the St. Regis in Century City will be going condo. “The condo converter in every single case can pay more for the hotel than a hotel operator can,” Reay says.

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