O.C. Hoteliers’ Occupancy Rates Increase Briskly

March came in like a lion and stayed that way for Orange County hoteliers as spring vacationers and business travelers kept county hotels 77% full, a solid 8.4% increase over the average rate for the same month last year.

Business was especially brisk in Anaheim, where visitors heading to Disneyland’s Indiana Jones Adventure ride helped boost the average occupancy rate 9% to 79.5% in March.

“It’s been a strong spring and I see it continuing,” said Mark Dillinger, general manager of the Holiday Inn Anaheim Maingate just outside Disneyland. “People aren’t as afraid to spend money as they have been.”

March capped a robust first quarter for Orange County hotels. The average occupancy rate countywide hit 70.3% for the first three months, a 6.6% increase over last year’s first quarter, according to a survey by PKF Consulting in Los Angeles.

Hotel operators and industry analysts credit the surge on a rebounding economy, growing corporate travel, consumer optimism and the continued appeal of Disneyland’s year-old Indiana Jones attraction.

But room rates remain sluggish, and observers say the recent spike in petroleum prices could put a drag on the tourist season and the economy in general, though they say it’s still too soon to tell.

“The dark clouds out there are gas prices and the potential for a economic slowdown nationally,” said Bruce Baltin, PFK’s senior vice president. “But right now things look good. It’s time to make hay while the sun shines.”

Following lean years in the early 1990s, county hoteliers had looked forward to bumping rates up a bit as the tourist economy shook off the effects of the recession. But that has proved difficult, particularly in Anaheim where a higher occupancy rate belies ferocious competition.

In the first quarter, room rates countywide averaged $84.12, a 2.7% increase over last year’s first three months. But in March, Anaheim hoteliers pulled the countywide average down 0.2% to $83.62 as they lowered rates to compete for vacation business. The average room rate in Anaheim dropped 2% to $88.68 in March, down from $90.67 the year before.

“Anaheim isn’t like a lot of luxury resort areas,” Dillinger said. “It’s a family market where people are very price-sensitive.”

Though leisure travel is the linchpin for the Orange County hotel market, the corporate market showed strength in the first quarter as well. Occupancy rates at hotels near the John Wayne Airport climbed to 76% in March, an 8% increase over the same month last year.

Emmett Steed, general manager of the Red Lion Hotel in Costa Mesa, credits strong corporate profits and continued health in technology and other key segments of the California economy.

“The general business climate is pretty solid,” Steed said. “It would take something major like an earthquake or riot to slow things significantly.”

Corporate meetings also helped stoke greater business in the South County market, where occupancy rates and room prices increased sharply in March. The average occupancy rate for the region, which boasts several luxury hotels and resorts, increased 7.1% to 69.1% in March, while room prices climbed 8.7% to $95.65.

Corporations are not as rate-sensitive as leisure travelers, said Michael Miner, general manager of the Marriott Laguna Cliffs Resort.

Even so, he said his resort reaped the benefit of the hard winter back East as weary snowbirds headed West in the first quarter to escape the cold.

“People were claustrophobic,” Miner said. “We saw a big increase in vacationers who were fed up with the weather back home.”

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Occupancy Rates Rise, Room Rates Stagnate

Tourists and business travelers kept Orange County hotels more full in March than they did last year. Anaheim was particularly busy, but a drop in room rates there pulled down the average price countywide in March. First-quarter figures, though, showed gains in both categories.

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Occupancy rate Average room rate March 1995 1996 Change 1995 1996 Change Anaheim 72.93% 79.50% 9.0% $90.67 $88.68 -2.2% Airport area 70.38 76.00 8.0 75.15 76.93 2.4 North County 66.08 70.05 6.0 59.60 61.71 3.5 South County 64.48 69.09 7.1 88.02 95.65 8.7 Countywide 71.09% 77.04% 8.4% $83.80 $83.62 -0.2%

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Occupancy rate Average room rate First Quarter 1995 1996 Change 1995 1996 Change Anaheim 67.15% 71.81% 6.9% $87.40 $89.08 1.9% Airport area 67.54 71.31 5.6 76.26 79.27 3.9 North County 60.14 63.56 5.7 60.92 62.59 2.8 South County 58.90 63.91 8.5 86.05 91.52 6.4 Countywide 65.89% 70.25% 6.6% $81.92 $84.12 2.7%

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Source: PKF Consulting; Researched by JANICE L. JONES / Los Angeles Times