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Sunnier Forecast for Tourism in Santa Monica  

By Ed Moosbrugger

January 25, 2011 -- Santa Monica's hotel industry, a key barometer of the health of the local tourism business, had a better recovery than expected during 2010, and the prognosis is for further improvement in 2011.

That's good news for Downtown retailers and restaurants, many of which rely heavily on spending by visitors.

"Santa Monica continues to be one of the strongest destinations in the country with occupancy and rates steadily strengthening," said Misti Kerns, president/CEO of the Santa Monica Convention & Visitors Bureau (SMCVB). "We expect to see steady growth in rates in 2011." Hotel occupancy should remain strong at 80 percent or more, she said.

That positive assessment finds support in comments by some Downtown hotel operators, as well as regional and national forecasts.

"Business was definitely up for us, probably 10 to 15 percent," said Angela Rogers, executive manager of the Hotel Carmel at Broadway and Second Street. Rogers isn't sure about the outlook for 2011, but she expects business to be as good or better than 2010, when it was "very good."

Activity was better than anticipated last year at the Fairmont Miramar Hotel & Bungalows at Wilshire Boulevard and Ocean Avenue, said General Manager Wolfgang Jonas.
Occupancy is back to pre-recession levels, although room rates still have some ground to make up, he said.

For 2011, Jonas expects high demand for hotel rooms, which could allow room rates to rise 6 to 8 percent. The hotel already has an occupancy percentage in the mid-80s so there is a limit to how much that can improve, Jonas said.

At the Ocean View Hotel on Ocean Avenue, business was up in 2010. The hotel is running at very high occupancy and room rates increased about 6.3 percent, said Robert Farzam, chief operating officer of Ocean Avenue Management, which owns the Ocean View Hotel and the 164-room Shore Hotel, which is scheduled to open this summer on Ocean Avenue.

"I'm predicting a strong 2011," Farzam said.

In its annual forecast, Colliers PKF Consulting sees a 3.5 percent increase in occupied hotel rooms in Santa Monica in 2011, compared with an estimated 6.1 percent jump in 2010 and a 4.2 percent drop in 2009.

Even with the addition of the Shore Hotel, the occupancy rate is forecast to rise to 80.8 percent in 2011 from 80.4 percent last year and 75.8 percent in 2009. The average room rate is expected to jump 6 percent in 2011, up from a 3.1 percent rise in 2010 and a decline of 16.3 percent in 2009.

For the first nine months of 2010, Santa Monica had the highest occupancy rate among submarkets of Los Angeles County tracked by Colliers PKF and was among the few to show an increase in average room rates.

"The stability of the (Santa Monica) market can be attributed to the presence of a stable commercial segment combined with high end group and leisure business," said Colliers PKF.

On the national scene, the U.S. Travel Association expects total travel spending in the United States to rise 5.2 percent in 2011, compared to an estimated 7.3 percent in 2010 and a drop of 8.8 percent in 2009.

The association is forecasting a particularly strong increase in spending by international visitors, who are very important to Santa Monica. Hotel Carmel, for example, gets about 85 percent of its business from international travelers.

The Visitors Bureau "will continue to be active in our best performing market segments of the United Kingdom, Australia and New Zealand," Kerns said. The visitors bureau also expects to keep in touch with the emerging market of Brazil and reports an increase in leads from the incentive travel and sports markets.

The reopening of Santa Monica Place as a luxury-oriented shopping center also has had an impact on the local visitor industry.

"We have quite a lot of business from the opening of Santa Monica Place," which has made Santa Monica more of a shopping destination, Jonas said. Now, he said, visitors don't have to go to Rodeo Drive in Beverly Hills for high-end shopping.

Santa Monica hotels also got a boost in early November from the annual eight-day American Film Market. Overall attendance rose 6 percent to 7,695, which was better than expected.

The planned opening of the Shore Hotel this summer will add to Downtown's attraction for visitors. The hotel will be more upscale than the Ocean View Hotel, with a pool, spa and fitness center. Two restaurants are planned.

It all adds up to a promising 2011, with Jonas calling the outlook "rosy."


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