Hotel Occupancy Up but Room Rates Flat

Orange County hoteliers are putting out the welcome mat for Indiana Jones and the Jaguar.

A tourist boomlet fueled by the new attractions at Disneyland and Knott’s Berry Farm boosted occupancy rates at Southland hotels to nearly 70% in 1995, the highest level in five years, according to recent figures from an area hotel consultant.

But county hotel owners aren’t popping the champagne corks just yet. Intense competition, tightfisted tourists and a lingering recession mentality among hotel operators are helping to keep a lid on room rates--and hotel profitability. Countywide, room rates last year edged up to $77.02, a 2.2% increase that trailed even the inflation rate.

“Occupancy is definitely up . . . but room rates have been a problem,” said Bill O’Connell, general manager of four Best Western Stovall’s Inns in Anaheim, a tough market where 1995 average room rates increased a mere 1.3% over the year before. “The competitive nature of our business has made it hard to raise room rates. Hopefully, we’ll see some improvement this year.”

The 1995 occupancy at Orange County hotels increased 7.8% over 1994 to an average of 69.2% on the year, according to PKF Consulting, a Los Angeles-based hospitality consulting firm. The Anaheim market was particularly strong, posting a 9.9% increase in occupancy, while North County was close behind with an 8.9% jump.

The recovering economy and reputation of Southern California were factors in the tourism boost. But PKF research analyst Melissa Mills credits the cat and the hat--the new Jaguar roller coaster at Knott’s Berry Farm and the opening of the Indiana Jones adventure ride at Disneyland--for much of the increase in overnight visitors to the Southland.

She said the attractions “were all heavily promoted and did gangbuster business. That really helped the hotels in north Orange County.”

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Indeed, the rise in hotel occupancy corresponded to an overall increase in tourist visits to the Southland last year. An estimated 38.2 million tourists visited Orange County in 1995, a 3% increase over 1994 and the highest number since 1989, according to the Anaheim Orange County Visitor and Convention Bureau.

Amusement Business magazine estimates that Disneyland attracted a record 14.1 million visitors last year, placing it No. 2 on the list of the world’s top 50 amusement and theme parks.

But whether that momentum can be sustained remains to be seen. The thrill of the latest adventure ride fades quickly for California day-trippers. But PKF’s Mills expects Indy and the Jaguar to continue to draw new visitors into the Southland in 1996. Likewise, Mills anticipates that this year’s planned opening of a Jurassic Park extravaganza at Universal Studios Hollywood will have some spillover benefit for Orange County.

“It could help to stimulate the whole region,” she said.

Mills likewise expects Orange County hotel room rates to start going up in 1996. But Ned Snavely, general manager of the Anaheim Marriott, is more cautious about the continued tourism windfall from the new Disney and Knott’s Berry Farm attractions.

Snavely expects the “been there, done that” factor to affect the attractions in 1996.

The best hope for long-term improvement in area hotel occupancy and room rates, Snavely contends, is more big-ticket entertainment draws, such as the long-awaited Disneyland expansion, which is expected to be announced by the Walt Disney Co. within weeks.

“We’re holding our breath,” Snavely said.