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Tuesday, Jan 31, 2023

ConVis Now Predicting Smaller Hike in ’08 Hotel Room Rates

The San Diego Convention & Visitors Bureau, which painted a rosy picture for the lodging industry in its original forecast for 2008, is now painting one that’s a little less rosy.

According to ConVis, the anticipated average daily hotel room rate, which has been on a roll since 2004, is expected to go up again in 2008.

But the margin of increase would be smaller, up 3 percent versus 5 percent, as first thought.

In 2007 the average daily rate stood at $138.89, a 5.8 percent bump from 2006.

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According to the bureau’s forecast made in late December, the rate would reach $144.41 by year end. Now the outlook is for $143.06.

“What we’re seeing is pressure in the marketplace on the rate side,” said David Peckinpaugh, ConVis president and chief executive officer. “People will continue on with their travel plans, but the pressure to negotiate rates will be an issue, largely because of the Internet, which drives rate competitiveness.”

The estimated visitor tally was revised downward, but only slightly, to 31.9 million from 32 million. It’s still up from the 31.6 million that came last year, but the count of Mexican day trippers was revised to 3.9 million from 4 million. In 2007 it was 4.1 million.

Direct Spending

Nonetheless, direct spending, which reached $7.9 billion in 2007 is still expected to reach $8.13 billion this year.

Carl Winston, director of San Diego State University’s Hospitality and Tourism Management School, said the bureau’s forecast was amended because portions of the original were overly optimistic in the face of a weakening economy.

“San Diego (tourism) had a weak first quarter,” he said. “The county had several years of really strong growth, and now things are turning.”

As for the increased inventory of hotel rooms, he said he thinks there’s no fear of an oversupply in the long term because the fundamentals of the local lodging industry are sound.

By the end of this year, the inventory of hotel rooms is projected to reach 57,688, up from 55,694 in 2007 and 54,095 in 2006, according to ConVis.

Hotel owner and former lodging consultant Bob Rauch said he thinks the ConVis revision regarding estimated average daily room rates is conservative. He expects this year’s rate increase will be up 4 percent from 2007.

“January through March was shaky, but it was a combination of bad weather, and corporate bookings were down,” he said. “Corporate bookings are a larger percent of overall business in the winter. But we still have strong bookings through the convention center.”

Summer Travel

However, Rauch expects that the peak summer travel season will outdo last year unless gasoline at the pump reaches $5 a gallon. In the past few weeks prices across the county have hovered around $4 a gallon for regular unleaded.

Smith Travel Research, which keeps tabs on the nation’s hotel industry, reported that the county’s inns saw an average occupancy rate of 68.4 percent during the first quarter, down 3.1 percent from the like year-ago period, while the average daily room rate of $137.79 was up 2 percent. The money hotels took in from the rooms that were let during that period was an average of $94.25, a decline of 1.1 percent.

During the week ending May 3, the most recent report from Smith Travel Research, occupancy was up to 74.6 percent, an increase of 9.7 percent.

Meanwhile, the passenger tally at Lindbergh Field shows no signs of abating. During the first quarter a total of 4.3 million people flew in and out of the airport, up 6.7 percent from the same period in 2007, according to a report by the San Diego County Regional Airport Authority.


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