In West Hollywood, the upscale Sunset Marquis Hotel and Villas cut some room prices by more than half during the holidays, offering two-bedroom villas that usually go for $2,400 a night for $700. Promotional rates for this year reduce basic junior suites from $390 a night to $305.
The lean times, which are expected to last into 2010, follow a nearly decade-long boom starting in the late 1990s. Hotel business dipped sharply in the recession of 2001 and 2002, especially in the months after the Sept. 11 terrorist attacks. But after that interruption, the years that followed were good ones for hoteliers as travelers resumed their free-spending ways.
Hotels sold at ever-increasing prices and properties were built all over the country to meet growing demand. Orange County saw the creation of fancy new inns such as the Resort at Pelican Hill in Newport Beach, St. Regis Monarch Beach Resort in Dana Point and the Hyatt Regency Huntington Beach Resort & Spa.
Several older hotels in Los Angeles County received multimillion-dollar upgrades and returned with higher room rates and often with new names. Among those reborn in recent years was the Palomar in Westwood, formerly a Doubletree; the Hotel Angeleno in Brentwood, formerly a Holiday Inn; and the London Hotel in West Hollywood, formerly the Bel Age Hotel.
Those hotels were planned in a flush economic era that now stands in stark contrast to today's new "normal" of frozen credit, home foreclosures and horror on Wall Street.
"This is a bad time in part because it is coming off of a great time," said Bruce Baltin, senior vice president of PKF Consulting Corp., which monitors the hotel industry. "The years 2005 and 2006 were all-time highlights for Southern California."
Much of 2007 was also great, followed by a gradual loss of momentum into 2008 as occupancy dwindled. Then came the credit market meltdown last summer and the ensuing economic crash. Business and leisure travelers quickly cut back.
"September was definitely a point of departure, when hotel revenues around the country began a free fall," said Los Angeles attorney Jim Butler, a hotel specialist and industry blogger. "Since Labor Day, business has been falling off a cliff."
Indeed, U.S. hotels have entered one of the deepest and longest recessions in the history of the country's lodging industry, according to a December report by PKF Hospitality Research. The report predicts a nearly 8% drop this year in revenue per available room, a key industry measurement of performance typically calculated by multiplying a hotel's average daily room rate by its occupancy rate.
