Hotel Business in O.C. Dips in Critical Month : Tourism: July’s occupancy rates were down 6.2% from a year ago, with Disneyland area hardest hit. Weak economy draws most of the blame.

After six months of increases, the occupancy rate at Orange County hotels plunged 6.2% in the critical tourism month of July.

Hardest hit was the cluster of hotels near Disneyland--the heartland of the county’s tourism industry--where occupancy fell 10.5%, according to a monthly survey released Wednesday by PKF Consulting in Los Angeles.

“A lot of this decrease is coming from the economy overall, not just the (Los Angeles) riots,” PKF Director Bruce Baltin said. “It’s weird. This has been a very strange summer. We’re still trying to figure out what’s going on.”

The average Anaheim-area hotel had a 72.9% occupancy rate in July, compared to 81.5% for the same month last year. For Orange County as a whole, the July occupancy rate was 70.4%, down from 75% a year earlier.

Hotels generally need to fill 60% to 65% of their rooms to break even, Baltin said. But for an area like Anaheim, the summer tourism season is crucial, and higher occupancy rates are needed to carry hoteliers through the slower fall and winter months.

Curiously, the only region to show an increase in hotel occupancy was North County, where the rate rose to 70%, up 4.1% over July, 1991. Baltin, who oversees the compilation of the figures, said that may have been because tourists, still nervous after the April riots, chose to stay in Orange County as an alternative to Los Angeles.

Even though fewer tourists were spending nights in Orange County hotels, overall they were paying more. The average room rate for the month was $75.38, up 0.4% from $75.05 in July, 1991. The only area showing a rate decrease was Anaheim, where some hotels offered discounts to attract guests.

At the Pan Pacific Hotel just west of Disneyland, Marketing Director Ron Gephardt said the hotel saw a large drop in business in July compared to June, which is a popular month for tour groups. In July, he said, the hotel is more dependent on tourists traveling independently. This year, those visitors showed up in smaller numbers.

Japanese travelers, who account for about 18% of the hotel’s business, were initially scared off by the riots but have slowly started to come back. And Easterners glued to their TVs during the disturbances were not likely to book Southland vacations right away.

“With the combination of (earthquakes and) riots, this was the worst place in the world to go” in the eyes of tourists, Gephardt said. But those memories faded after a few months, he said, noting that August was much busier.

Ned Snavely, general manager of the Anaheim Marriott, said he thinks that earthquakes and riots had little to do with the decline in July’s occupancy rate at his hotel. He said none of the guests he has spoken with mentioned those events. Instead, he said, the decrease probably resulted from economic factors.

“Clearly, there is a market factor of stronger value-conscious consumers,” Snavely said. “They either won’t stay at a hotel or will find alternative lodging,” he said, such as staying with friends or relatives.

Fewer Japanese tourists and fewer conventioneers have been coming, and those groups are two key segments of the local hotel market, he said. Because of the recession, he said, companies and government agencies are cutting back on the number of people they send to conventions.

Jittery July

After six straight months of increases, hotel occupancy took a precipitous fall in July--one of the most important months of the year for Orange County’s tourism industry. The drop was felt deepest in the county’s tourism center of Anaheim.

North

July, 1992: 70.0%

July, 1991: 67.2%

Anaheim

July, 1992: 73.0%

July, 1991: 81.5%

Airport

July, 1992: 64.8%

July, 1991: 66.7%

South

July, 1992: 73.2%

July, 1991: 74.7%

Average Daily Room Rate

In every area except Anaheim, hotel operators charged more for their rooms this past July than they did in July, 1991.

Area July 1991 July 1992 % Change Anaheim $75.90 $73.41 -3.3% South 110.14 113.99 +3.5% Airport 77.36 84.46 +9.2% North 58.03 58.69 +1.1%

Visitors’ Preference in Price ...

Guests who came to Orange County hotels favored more expensive rooms. The lowest-priced rooms showed the biggest drop, while the pricier rooms showed the biggest increase.

July 1992 Cost of Room Occupancy Rate Less than $35 63.9% $35.01 to $55 71.5% $55.01 to $75 71.5% $75.01 to $100 65.3% $100.01 to $135 89.6% More than $135 71.4%

...and Size

The biggest hotels had more trouble filling their rooms. The smallest ones did best.

July 1992 Size of Hotel Occupancy Rate Less than 100 rooms 73.4% 100 to 199 Rooms 71.2% 200 to 299 Rooms 70.0% 300 to 600 Rooms 71.8% More than 600 rooms 67.3%

Source: PFK Consulting