While they’re not booking the room rates or racking up the revenue like they did before the recession, Park Hyatt Aviara and other local luxury resorts are crediting a rise in corporate group travel for a distinct uptick in visitors in 2011.
“There are signs that we have moved off the floor, and it looks like the recovery started to pick up some movement about six months ago,” said Mark Stiebeling, general manager of the 329-room resort on 200 acres in Carlsbad, known as Four Seasons Aviara before a management switch last year.
“The corporate leaders have decided, ‘We need to get our employees together face to face,’ and that’s going to make a difference for our group bookings going forward,” Stiebeling said.
Properties like the Aviara were hit hard by the downturn. For 2011, its operators are projecting that occupancy will finish about 10 percentage points higher than 2010, with room revenue improving 15 percent to 18 percent.
Similar assessments about the current climate and future prospects come from operators of other high-profile luxury properties in San Diego County, including The Grand Del Mar, Hotel del Coronado and La Costa Resort and Spa.
Hospitality experts note that the highest-end luxury properties were hit the hardest locally and nationally when the U.S. financial collapse of late 2008 significantly curtailed business and leisure travel — especially conferences at luxury resorts.
But the luxury properties have also been quicker to bounce back than their lower-priced counterparts from a dismal 2009 in terms of occupancy and revenue. However, room-rate growth in the luxury segment remains sluggish due to competitive pricing geared to snagging that lucrative group business.
According to data from Smith Travel Research Inc., the San Diego region’s large luxury hotels and resorts have not returned to pre-recession revenue levels, which peaked at $221.3 million in 2008. But reflecting the U.S. luxury market, the local high-end properties saw 2010 revenue top $179 million, beating 2009’s $174 million.
Jan Freitag, vice president of global development for Tennessee-based Smith Travel, says corporate meeting planners nationally are still flexing their muscles in the current market, in terms of locking in low negotiated rates in relatively short advance-time windows.
A Grand Summer
Tom Voss, president of Manchester Grand Resorts, which operates the 249-room Grand Del Mar in Carmel Valley, says business has been humming on several cylinders lately. The hotel, where nightly rates range from $400 to nearly $4,000, was almost completely booked for the summer as of June 20, save for about 10 available room nights.
Compared with the same point a year ago, Voss says revenue and total bookings are up more than 20 percent, and diners are spending about 4 percent more at the resort’s restaurants. For 2011, the resort — which opened in 2007 after being built for approximately $300 million — is on track to see group bookings rise 14 percent and leisure bookings increase 21 percent versus 2010.
One major difference in the climate, he says, is that corporations are now splurging for extras to reward top employees, with more spa, shopping, golf and other resort-related excursions being purchased in connection with company gatherings than was the case a year or two ago.
“We’re seeing the business meetings coming back,” said Barry Brown, director of sales and marketing for the historic, 757-room Hotel del Coronado. “Companies are realizing that there are salespeople who need to be motivated, and product and service users who need to be educated.”
He added, “There’s a little less uncertainty and a little more confidence about the future.”
Leisure stays are also rebounding significantly from a year ago, though the full extent won’t be known until the resort sees final numbers for July and August, traditionally its busiest period, Brown says.
To stay competitive, The Lodge at Torrey Pines in La Jolla and other local resorts used the relative downtime of the recession and post-recession period to complete multimillion-dollar renovations.
At the 610-room La Costa Resort, General Manager Paul McCormick says summer hiring is picking up, as the property reopens guest rooms, restaurants and other elements that were improved as part of a long-range, $50 million renovation by owner KSL Resorts. A $10 million renovation of the resort’s golf courses is under way.
McCormick says corporate bookings and inquiries are trending ahead of a year ago, and there are signs of increased conference activity by business customers in the Northeast — where many large corporations, including financial firms, have headquarters. That’s an indicator that post-meltdown shame among big companies about holding meetings at high-end resorts is ebbing, though corporate bookings from regions such as the Southeast are still lagging.
He says local resort operators will be watching the potential impact of California’s budget situation, which could affect consumer confidence and resort bookings by national companies that are based in the state.
In 2009, deemed among the worst years on record for hotels nationwide, San Diego’s luxury properties saw occupancy drop 7.6 percent from the prior year, while average daily room rates declined nearly 15 percent and revenue per available room plummeted more than 21 percent, according to Smith Travel.
All of those measures trended positive in 2010, except for room rates, which dropped an additional 4 percent, Smith Travel reports.
For the first five months of 2011, luxury hotels in the San Diego region saw revenue reach $80.5 million, up 15.6 percent from the same period of 2010. All of the room-performance measures are up, and in percentage terms they have improved at a greater rate than the overall San Diego hotel market for occupancy (13.6 percent compared with 3.5 percent); and per-room revenue (15.7 percent versus 7.8 percent).
Local luxury room-rate growth is slower this year, however, with an improvement of 1.9 percent, compared with 4.2 percent for all hotels.
“It’s still a steep hill-climb,” McCormick said of the recovery climate. “It’s not going to be a steady climb to the top, but we will get there.”