Local Hotels See Recovery – Los Angeles Business Journal

Monday, May 31, 2021

It’s a Friday evening high above the Sunset Strip, and the rooftop of Pendry West Hollywood — a new complex that holds a private social club with a rooftop bar and restaurant, multimillion-dollar condos and a hotel managed by Montage Hotels and Resorts — is buzzing.

 

The dozen or so tables at the property’s members-only social club Britely are fully booked. Women lounge at the hotel pool, and servers greet guests trickling into the hotel’s Wolfgang Puck restaurant, Merois.




The rooftop isn’t open to the public, at least not yet, which means all the diners, bargoers and pool guests are staying at the Montage or are Britely club members.


 

That a brand-new hotel, which has nearby competition from big brand names like Sunset Tower and Andaz West Hollywood, is booking rooms and filling up its bars and restaurants is one of many signs that the hotel industry in Los Angeles is sputtering back to life.




“The Montage, our wheelhouse is domestic leisure travel, so it’s a great way to start,” said Karen Dailey, director of sales and marketing for Pendry West Hollywood.


 

Dailey and other L.A. hotel operators say the resurgence is fueled in large part by staycations. Vaccinated Southern Californians are taking advantage of deals and discounted room rates and booking short weekend stays.


 

Guests in search of mild weather and a bounty of outdoor activities and patio dining options are also streaming in from places that are within a few hours’ drive of Los Angeles.


 

“It’s been exciting,” said Amy Castillo, director of sales and marketing at Hotel Erwin in Venice. “We didn’t expect it to come back like it has. It’s almost like drinking from a firehose.”


 

L.A. occupancy rates jumped up to 62% in May, from 43% in January, and closer to pre-pandemic averages of 80%. For nine weekends in a row, hotels in Los Angeles County have been at least 70% full, according to the Los Angeles Tourism and Convention Board.


 

And several new properties are readying to make their debut, including The Shay at Ivy Station in Culver City, a new downtown outpost of Proper and the revamped Fairmont Century Plaza in Century City.


 

“That’s incredibly encouraging,” said tourism board Chief Executive Adam Burke. “There’s no question that’s there’s tremendous pent-up demand.” 



‘Vacci-cationers’

At Dream hotel in the heart of Hollywood, occupancy rates started ticking up in March, right around the time that immunization rates started to climb, said General Manager Vaughn Davis.



Guests are coming from all over California, along with Las Vegas, Arizona and Texas, and they’re pretty much all staying for fun and relaxation, not business. They are what Davis and other hoteliers affectionately call

“vacci-cationers.”




“We see that there was a lot of pent-up demand from people being home during the pandemic that has translated into a boom in vacation travelers,” Davis said. “They’re excited to get back to some sense of normalcy.”




At Hotel Figueroa in downtown, guests are mostly coming from Southern California, but also Nevada and Arizona, according to Managing Director Connie Wang.




“We noticed a shift in who was coming to the hotel, and we shifted our marketing strategies to focus on local Angelenos in particular with staycation offers,” she said.


 

Hotel Erwin in Venice has made $60,000 in revenue over the past five months off its “vacci-cation” package — vaccinated guests get 30% off a two-night stay, plus four mini bottles of booze and an insulated to-go cup for drinking on the beach, Castillo said.


 

“From a staff point, we really miss that international flair. You (used to) hear six different accents or languages in the lobby at any given time,” Castillo said. “But it’s been exciting to celebrate Venice with Californians and locals who probably wouldn’t have traveled to Venice. We are so stoked to have people back and see a different blend of traveler.”


 

To capitalize on the surge in local travelers and the “drive market” of people within a seven-hour drive of L.A., the tourism board dropped $10 million on its first national advertising blitz — a TV ad that launched in mid-April with the tagline “L.A. is a comeback story.”


 

The spot is airing in 20 markets, including six cities where the tourism board has never advertised before and that are just a short flight away: Dallas; Denver; Houston; Portland, Ore.; Salt Lake City; and Seattle.


 

Before Covid-19, Burke said the tourism board prioritized international markets, because travelers from other countries tend to stay longer and spend more money while they’re here.  




But the pandemic forced the agency to shift its approach.




“If there’s anything that the pandemic has taught us it’s (the importance of) having some presence with the local market,” Burke said. And, he added, “Angelenos represent a strong audience, so people in L.A. will also have a chance to see the spot.” 




Sunny days ahead

L.A.’s famously good weather is paying off for the hotel industry.



“We have families with kids learning to surf. Families coming and staying in a suite, and they’re going out on bikes and scooters,” Castillo said. “We have what I call gen-zennials, Gen Z’ers and millennials, taking a couple of rooms and doing something on the roof.”




During the pandemic, the hotel invested in a fleet of new rust-resistant bikes.


 

“We just knew our guests would be looking for those types of activities,” Castillo said. “That helps with our comeback. There’s this sense of safety. … You can get outside; you can party like you used to under the current constraints.”




At Dream, Davis said guests have gravitated toward the property’s outdoor spaces, and staff worked to accommodate them.




“We built an outdoor patio for Beauty and Essex with upwards of 20 tables outside,” he said. “We obtained sidewalk permits for 50 tables outside Tao.”




“For our guests, the biggest thing for them was the outdoor dining, the warm weather. … They felt comfortable being in those spaces. That helped drive more tourism to Los Angeles,” Davis added.


 

 Guests may be booking rooms, but they’re paying a lot less.


 

“As occupancy started to dip over the course of the last year, hotels dropped rates to continue capturing the business that was out there,” said Burke. “It’s far more affordable than it ever has been.”




Guests can book a room with a king bed on a Saturday night in July for about $180 at Freehand Los Angeles in downtown, $275 at the Line Hotel Los Angeles in Koreatown or $325 at the Hollywood Roosevelt.


 

Burke predicts rates won’t fully recover until 2023 or 2024.


 

“It takes far longer for rates to rebound upward than it does downward,” he said.


 

But that’s not dashing any hopes for a prosperous summer and fall.


 

Castillo said Hotel Erwin was on track to sell out Memorial Day weekend and is already seeing “nice pickup” for Labor Day.


 

Looking even further out, Davis projects Dream will surpass its 2019 figures.




“I believe in 2021, especially after June 15, we’re going to see a resurgence of travel,” he said.

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