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Hospitality And Tourism Industry To See Further Growth In 2012

Hotel Occupancy, Revenue To Keep Rising; New Attractions, Renovations In The Works

By Sean Belk - Staff Writer

December 20 - Aggressive marketing tactics, revamped facilities and a rise in overseas and corporate travelers helped push Long Beach’s hospitality and tourism industry into the black this year. While cautiously optimistic, local industry experts and economists said the upswing should continue into 2012.

This photograph by the Business Journal’s Thomas McConville is all about the hospitality
and tourism industry. Pictured are parts of the Long Beach Convention Center, the Hyatt
Regency Long Beach, a Carnival Cruise Lines ship docked at its terminal and the Queen
Mary. Below, McConville’s picture shows the huge Downtown Marina, with the “whale covered”
Long Beach Arena at left.

“Long Beach is a pretty active destination, and the hotel industry is pretty important too,” said Bruce Baltin, senior vice president for Colliers PKF Consulting in Los Angeles. “The gateway cities are recovering faster than most ... and the Greater L.A. area is among the top. All the indications are that it should be a pretty healthy year next year.”

Coming off a three-year slump, hotel occupancy in Long Beach steadily grew in 2011, allowing some hoteliers to slightly edge up room rates, while investing in major renovations. Although a few conventions and special events were cancelled this year, persistent marketing efforts helped lure new industry trade groups and business clients to Long Beach. Bookings, however, are now smaller and more short-term, meaning scheduled for a shorter duration and not as far in advance as past years.

Still, the turnaround is a welcome sign as the nation’s volatile economic growth slowed in the third quarter this year. The rebound adds to employment gains that have improved in recent months. In November, the unemployment rate in Long Beach dipped to 12.7 percent, the lowest in more than two years, while Los Angeles County’s jobless rate dropped to 11.5 percent.

Local industry experts and economists said Southern California’s tourism and convention business continues to be a key player in the region’s economic recovery, generating thousands of jobs and millions in sales tax revenue.

In fact, a vast majority of cities throughout the state posted “double digit increases” this year in RevPAR (revenue per available room), a gauge used in the hotel industry to determine overall earnings after factoring hotel occupancy and average daily room rates (ADR). A portion of hotel revenue contributes toward the city’s general fund through the hotel bed tax.

According to the 2012 Southern California Lodging Forecast by PKF Consulting released in November, it is estimated that Long Beach will see an 11.7 percent increase in overall RevPAR in 2011 over last year – the highest increase since the market began declining in 2008. The city’s overall hotel occupancy rate is also expected to climb this year to just below 70 percent, which is a 7.4 percent increase over last year.

For 2012, a 9.7 boost in RevPAR for Long Beach is projected, while overall hotel occupancy rate is anticipated to rise to 72.2 percent, a projected 4.5 percent increase over this year. ADR is also expected to increase 5 percent to an average of $136 per room, according PKF Consulting.

Baltin attributes a majority of the region’s recovering hotel market to the fact that coastal destination cities are major draws for international tourists. On the West Coast, leisure travelers come from such countries as China, Korea, India and Australia. He expects the trend to flow into next year.

Kimberly Ritter, associate economist for the Los Angeles Economic Development Corporation’s Kyser Center for Economic Research, said Los Angeles County saw a 51 percent jump in convention room bookings and a 16 percent increase in overseas visitors, who typically stay longer and spend more than domestic visitors.

She said the tide is also turning for corporate travelers as well. “What we’ve seen in the hotel industry going forth are ... some very sound fundamentals to build on,” Ritter said. “Corporate profits are going up. You’ve got more business travelers out there again. You’re starting to see incomes rise a little bit. People, particularly in the professional trades, are starting to travel again.”

However, Baltin said next year’s increase in hotel occupancy and revenue is projected to be slower than this year, which is typical after a major recovery. “The pace of growth is slowing down because you’re getting back to a more stabilized level again,” he said.

Ritter said hotels should start backing off on deals and discounts that were once the norm during the recession. However, she added that worldwide economic conditions, such as in Europe, will likely determine whether hotels increase prices.

“It’s going to be hard, because people are so used to getting discounts,” Ritter said. “You also have all these social media [tools] that people now can look at and really go out there and shop for the best deal. So, it will be this tug of war between the two.”

Conventions: Trade Shows, Special Events And Meetings

After some conventions and special events were nixed this year, Steve Goodling, president and CEO of the Long Beach Convention & Visitors Bureau, (CVB) said, in today’s economy, the CVB has been able to capture new clients that are requesting events, meetings and conventions on a more short-term basis.

He said the amount of short-term bookings for conventions at the Long Beach Convention & Entertainment Center have doubled over last year and now represent 70 percent of the CVB’s overall business. “We are finding a lot more groups ... that want to confirm within the next 12 months,” Goodling said. “It’s filling an opening within our city and therefore giving us the lift and the increase year-over-year.”

The city’s hotel community, he said, has delivered an extra $1.5 million this year over last year in hotel bed tax (TOT), which is split between the CVB’s dedicated advertising and promotions fund and the city’s general fund. Last year, the TOT generated a total of $14 million.

Goodling also said there’s been stronger convention attendance in recent months, a trend he said should continue into next year. “If you ask why people come to conventions, it’s to either sharpen their skill sets or reacquaint or expand their networking potentials for future jobs,” he said. “Those two roles continue to be vital in this economy and people are finding ways to make it work for them to attend conventions.”

Short-term conventions and events booked for 2012 include: Herbalife’s annual convention in October; Agenda LLC’s Winter & Summer Show in January and July; American College of Nurse Midwives’ convention in June; the American Association of Physicians of Indian Origin’s convention in June; USA Gymnastics Trampoline & Tumbling Championships in July; and the Pro Walk/ Pro Bike Conference in September. Shows and performances next year include Peter Frampton and comedian Ron White.

The star-studded TED Conference is scheduled for February 27 through March 2.

Other groups have locked in conventions for future years, after a collaborative effort between city officials and business leaders to promote Long Beach as a destination over competing cities. The Public Risk Management Association, for example, signed on for June 2014 after a group of city officials and local business leaders made a trip to Washington, D.C., this year, touching base with nearly 300 national associations. The Barbershop Harmony Society confirmed for January 2014 after being greeted by business leaders in the community, Goodling said.

“What we hear is Long Beach has a community feeling to it and it feels like a small town, even though it’s a large city,” he said. “Everyone works together. Everyone wants the business to come to the city and it’s very rare ... It’s a sense that they feel their business will be appreciated and their attendees will be treated respectfully and professionally. That’s a major difference from a competitive standpoint.”

Continuing efforts to reinvest in the city’s existing facilities has also given Long Beach an edge over other cities. The 340,000-square-foot convention center has received more than $5 million in tidelands funding this year toward renovations.

Goodling said the “cross generational” design includes Starbucks-style accommodations and “mini pod” lounge seating for attendees to socialize after business meetings and conventions. Other upgrades include: redesigning the fountain system; new carpeting and restrooms in the Promenade lobby and other areas; renovations to restaurant and dining areas and many other improvements.

Pennsylvania-based SMG, formerly known as Spectacor Management Group, currently manages the convention center and is planning to replant the Terrace Theater plaza with a tropical palm tree garden for use as additional space during receptions and an enhanced public walking area. Starting in January, the convention center will also be offering free Wi-Fi service in public areas as one of the only such convention centers in the nation to do so, Goodling said.

Additionally, he said the Long Beach City Council is expected to review a funding proposal in mid-January to remodel the Long Beach Arena. The $4.5 million to $6.5 million “loft-style ball room project,” has already received widespread attention from meeting planners eager to utilize the new space for functions, Goodling said.

Charlie Beirne, the convention center’s new interim general manager and a 12-year SMG regional manager from Atlantic City, said the new design is “a first” for convention centers and should be a hit with attendees. “I really believe that with all the renovations and the proposed plans for the Arena, it’s really going to pop and draw business here,” said Beirne, who took the post in early November, and will be filling in through the Toyota Grand Prix, scheduled for April 13 to 15.

Goodling explained that the convention center’s upgrades are in addition to various other developments and projects, including new lighting and public art throughout the downtown Promenade and a new airport terminal passenger concourse, proving that Long Beach continues to progress as a major competitive destination city. “As one planner said to me recently during a dinner . . . ‘Long Beach is growing up’ and it really feels more comfortable to [visitors] – like the cities they reside in,” he said.

Hotels: Remodels, Rebranding And Revenues

While hotel supply has remained unchanged this year, the recent rebound in hotel room occupancy and revenue has spurred some hotels to recently launch major overhauls, while others have begun planning. With anticipated hotel occupancy to rise, renovations at hotels throughout the city have totaled more than $40 million.

The Hyatt Regency downtown launched the most extensive remodel this year, investing $26 million to complete major renovations to all guestrooms, suites, corridors and bathrooms. The hotel’s general manager, Stephen D’Agostino, said a total of 200 guestrooms are expected to be out of service next year during renovations.

After the remodel is finished, he said the balance will be reinvested in other renovations to the rest of the hotel, such as the lobby, meeting space and the restaurant, throughout 2012 and 2013. “We’re continuing to improve the hotel so that we have a phenomenal product as we move along here,” D’Agostino said.

The renovations are a collaborative effort to mirror other renovations throughout the city, he said. D’Agostino added that the CVB has helped increase bookings of corporate travelers through conventions and events, which represents about 70 to 80 percent of the hotel’s business. “We want to make sure that what we’re doing, alongside other hotels, and even with the convention center, is to position Long Beach as the place to be in Southern California for meetings,” he said.

The Westin Long Beach is also investing in upgrades to the hotel’s lobby and restaurant, along with renovations to guestrooms to be fully completed in 2013. The Marriott Long Beach, near the Long Beach Airport, completed a nearly $10 million renovation to its ground floor, public space, meeting rooms, main elevator and fitness center this year.

After a brand re-launch in 2010, The Holiday Inn Long Beach Airport Hotel and Conference Center has invested in upgrades to the main entrance and a new guest Internet system, said Robert Smit, Holiday Inn’s general manager. The mid-price, mid-scale hotel is also planning further capital expenses to renovate public areas, guest rooms and meeting space. But the full scope of work hasn’t been finalized yet, he said.

Smit expects the hotel’s occupancy to increase 6 percent next year, exceeding market predictions, after seeing a “strong” recovery this year. Average daily room rates at hotels across the city, however, are expected to increase only minimally, Smit added. “We’ve seen some significant growth in 2011 and we’ll see continued growth in 2012,” he said.

The hotel, built in the early 1970s, continues to hold a firm corporate client base, while Long Beach Airport provides a stream of commuters and leisure travelers. “There are only a few of us that have a good combination of meeting rooms and hotel rooms to be able to accommodate a lot of people and, of course, people find access to Long Beach Airport extremely easy,” Smit said. “It’s a great marketing opportunity to have an airport in our backyard that’s very progressive.”

Across the harbor, the Hotel Maya Long Beach was rebranded as the Hotel Maya, a Doubletree Hotel by Hilton in November 2010, which brought a major boost for hotel occupancy and sales this year, said the hotel’s general manager, Kristi Allen. Part of the increase was due to frequent travelers attracted by loyalty benefits now offered by the new brand.

Next year, the hotel is planning promotions and celebrations for the end of the Mayan calendar, scheduled for December 21, 2012, which is the day some predict will be the end of the world. Allen also said the hotel is planning to build a new waterfront, outdoor fitness center.

As an 11-acre Latin-style resort hotel, boasting its own restaurant called Fuego, the Maya has seen a steady increase in bookings from business groups, in addition to leisure travelers, who are looking for an affordable weekend getaway, she said. “We experienced growth all through this year ... It’s been pretty solid,” Allen said. “We expect [sales] to continue to grow next year in all segments, not aggressively in any one segment, but steady growth.”

Meanwhile, the AVIA Long Beach, which opened at The Pike at Rainbow Harbor in 2009, is the latest hotel to be rebranded after Hyatt Hotels Corporation closed on a $660 million purchase on August 31 this year to buy 19 hotels from Kansas-based private hotel management company LodgeWorks, L.P. The acquisition involves the hotel brands Hotel Sierra, AVIA Hotels, Hyatt Place and Hyatt Summerfield Suites.

“This acquisition immediately expands our extended-stay presence, expertise and development capabilities in North America, as well as adds several unique full-service hotels to Hyatt’s portfolio,” said Mark Hoplamazian, Hyatt’s president and CEO, in a November third quarter financial report. “While it is still early, we are pleased with the initial results.”

The sale mirrors other similar transactions taking place in recent months as hotels become more attractive to buyers and investors, especially since the economy has been tough on independent hotel owners, according to experts.

Laurie Cole, spokesperson for Hyatt, said the hotel would no longer be called AVIA. However, the company hasn’t yet determined what to rebrand the AVIA and its other acquisitions. She also said the hotel already offers the Hyatt’s Gold Passport loyalty program for perks and accommodations for frequent stayers.

Attractions: Aquarium, Queen Mary, Shoreline Village And The Passport

Long Beach also boasts an array of unique attractions throughout the city that lure tourism and convention business, setting the city apart from the competition.

The Aquarium of the Pacific, known as the fourth largest aquarium in the nation with an annual attendance of 1.5 million visitors, has been steadily adding new exhibits and is continuing a long-term, $50 million expansion.

This year, the Aquarium opened its new Ocean Science Center, featuring a new technology-based “Science on a Sphere,” a room-sized, global display system developed by the National Oceanic and Atmospheric Administration to show planetary data as an educational tool on a six-foot diameter sphere. Current displays feature shows on sea level rise and the ports.

The Aquarium also introduced its new exhibit, “Arctic & Antarctic: Our Polar Regions In Peril,” which focuses on educating the public about climate change and features an Arctic fox animal exhibit, including two arctic fox pups, along with other animals from the polar regions.

Jerry Schubel, president and CEO of the Aquarium, said attendance this year has been relatively flat compared with last year and increasing ticket sales and memberships continues to be “challenging” in these economic times. The Aquarium currently has about 100,000 members, which represents about 30,000 households, he said. Operationally, however, Schubel said the Aquarium has not had to make any layoffs like other aquariums, museums and science centers during the economic downturn.

Constantly changing to stay relevant with new exhibits should entice attendees to keep coming back, he said. “It’s been tough, but a good year,” he said. “Always having something new and fresh gives people a reason to come and every year we try to have something new and different.”

In May 2012, the Aquarium is rolling out a new Magellanic penguin habitat exhibit, which was paid for by a private $1.2 million donation. The new June Keyes Penguin Habitat is currently under construction and will eventually feature about a dozen penguins, Schubel said. “People love penguins, so we’re hoping that Southern Californians will flock to the Aquarium to see them,” he said.

Next September, the Aquarium hopes to break ground on a project to expand the Aquarium’s retail store, Schubel said. It’s the first component of a major expansion project to develop various facilities at the front-end of the Aquarium, eventually including a two-story addition to be called “Pacific Visions”.

Just steps away, Shoreline Village at Rainbow Harbor continues to offer dozens of uniquely themed eateries and shops, along with various aquatic activities, such as sailing lessons and watercraft rentals. The Village also has seasonal and ongoing musical performances and events.

Property Manager Maureen Baker said The Village is expected to provide the same amount of promotions and events next year as in prior years. “We’ll be continuing with all of our events that have been very well attended in the past,” she said. “We’ve always gotten a good community response.”

Meanwhile, across the harbor, the RMS Queen Mary continues to be one of Long Beach’s biggest and most historic attractions, offering premiere restaurants, daily ship tours and its own renowned hotel accommodations.

It was announced in September that Newport Beach-based hotel management firm Evolution Hospitality has taken over management of the ship’s operations, replacing Delaware North Companies Parks & Resort, which parted ways with New York-based Garrison Investment Group, the ship’s investor and master leaseholder under Save the Queen, LLC.

Contacted by the Business Journal, Lynn Kozlowski, vice president of marketing for Evolution Hospitality, said she could not discuss the Queen Mary’s projections or plans for next year since the company is in the midst of finalizing strategies.

One major selling point for attractions is that tourists can ride the free Passport bus, which circulates to various hotels and venues downtown. Marcelle Epley, administrative officer and senior vice president of Long Beach Transit, said ridership of the Passport has almost doubled this year since 2009, jumping from 2.5 million passengers to about 4.26 million passengers per year as of this summer. She said the increase is a good sign that more tourists downtown are taking advantage of the free service.

“Ridership on the Passport system is up despite the fact that the economy has not been where it was several years ago,” Epley said. “What that tells us is the convention and visitor audience out there is taking advantage of the free fare downtown.”

While revenue from regular fixed-route bus service is relatively flat and funding from county, state and local governments has been a challenge, she said Long Beach Transit is still projecting a balanced budget next year. She said overall fares aren’t expected to rise since the bus system already raised fares 20 percent over the last two years.

Epley said Long Beach Transit has still been able to fund projects that have helped enhance the public transit system, including a $7 million renovation to the Transit Mall, renamed the First Street Transit Gallery, which now includes new public art and night-lighting.

Next year, Long Beach Transit is planning to replace 64 older-model diesel buses with new coaches that run on compressed natural gas, or CNG, while planning to convert the North Long Beach Transit facility at 6860 Cherry Ave. into a fully operational CNG facility. The non-profit service also received a $6.7 million grant to acquire all-electric buses in the next few years. “Long Beach Transit is going to be one of the cleanest bus companies, in terms of our transit fleet, in the nation,” she said.

On The Water: Cruises, Whale Watching And Catalina Express

Tourists are also drawn to Long Beach for its proximity to the Pacific Ocean and a harbor that offers small boat rides, fishing boats, ferry services and cruises, ideal for excursions of all types.

The biggest economic vessel in the harbor is Carnival Cruise Lines, which calls regularly at the Long Beach Cruise Terminal, across from the Spruce Goose dome and next to the Queen Mary. The cruise line generates millions of dollars per year in total direct economic impact to the state and regional economies, according to local economists.

Late this year, the cruise line announced year-round deployments of the 2,052-passenger Carnival Inspiration, repositioning to Long Beach for three-and four-day Baja departures. The 3,006-passenger Carnival Splendor continues to sail seven-day trips to the Mexican Riviera from Long Beach.

Vance Gulliksen, spokesperson for Carnival, said via e-mail that there were 152 total calls and approximately 351,000 passengers at the Long Beach terminal last year. He said Carnival Splendor and Paradise operated at “full occupancy” in 2011. “We are providing our guests with great three-, four- and seven-day vacations at affordable prices,” Gulliksen said. “These ships primarily attract guests from the West Coast and Long Beach is within a convenient driving distance for a large population base.”

However, he added that highly publicized violent crimes in Mexico continue to impact demand and ships have been deployed to other markets. Earlier this year, the cruise line was forced to cancel weekly calls in Mazatlan aboard the Carnival Splendor due to ongoing security issues, he added.

“There is the potential for further deterioration of West Coast cruise capacity as the overall demand and pricing outlook does not show signs of improvement,” Gulliksen said. “The negative consumer perception of vacation travel to Mexico is an ongoing issue.”

Meanwhile, Catalina Express, which offers ferry service from Long Beach, San Pedro and Dana Point to Santa Catalina Island, celebrated its 30th Anniversary this year. Catalina Express originally started with one 55-passenger vessel and now operates eight vessels, serving about 1 million passengers per year.

As part of anniversary celebrations, the company is offering passengers a free ride to the island on their birthday. The promotion is scheduled to end on April 30, 2012. Elaine Vaughan, vice president of sales and marketing for Catalina Express, said the promotion has been a “tremendous success,” not only for the vessel service, but for businesses on the island as well. The free rides helped attract people who had never been to the island before, she said.

“I think many people who live in the area and have been here for many, many years, but have never been to Catalina were motivated to go and see what Catalina’s all about,” Vaughan said. She added that the company is continuing to offer discounts on activities and tours, along with other “day pass” promotions throughout next year.

New attractions on the island, such as the zip-line and underwater SeaTrek activities, along with the remodeled Pavilion Hotel, Avalon Grill and Descanso Beach Club, should continue to create a “buzz” into next year, Vaughn said. “The projection is we are hoping for small increases,” she said. “We have been having consistent increases over the last year and a half, and we’re hoping that tide continues to come in.”

Harbor Breeze Cruises is also growing after opening 12 years ago at the harbor near the Aquarium. Today, the cruise service offers site-seeing excursions, including grey and blue whale watching trips and day- and night-time cruises around the harbor, carrying an estimated total of 168,000 passengers this year.

Dan Salas, Harbor Breeze owner, said the company has seen at least 15 to 30 percent sales growth annually, and he projects increases to continue next year. The biggest attraction for tourists from across the nation and the world has been the blue whale watching trips, he said, adding that Long Beach could be called the “whale watching capital of the world.”

Additionally, Salas said the city continues to pool together efforts in promoting Long Beach as a destination – where people come to experience the ocean. “In the evening, the Long Beach harbor – with the Queen Mary, the harbor, bridge and the Pike – is one of the most spectacular harbors anywhere on the coast,” he said. “We’re trying to bring the world spotlight to Long Beach ... and we still have the potential.”