“Numerology” tries to find reality within various measurements of economic and real estate trends.
Buzz: California’s hottest hotel market, when it comes to the growing demand for rooms, is much-maligned San Francisco.
Source: My trusty spreadsheet reviewed hotel performance data for 45 counties for 2023’s first six months, distributed by Visit California.
Fuzzy math: Is a big city tourism revival in the works?
Top Line
San Francisco County, the state’s fourth-largest hotel market, had demand for 3.9 million room nights in the first half, up 14.5% from 2022’s first six months.
Despite all the headlines about San Francisco’s urban ugliness, no other California had double-digit gains in hotel demand. Santa Cruz came in at No. 2 with its 7% gain.
Despite the jump, San Francisco County hotels were only 62% filled – a middling No. 23 ranking among the 45 counties. And it’s still a pricey place to stay with room rates at $251 per night (No. 2 statewide) after a 13.7% jump in a year, the second largest among the counties.
This seems to be part of a big-city tourism revival. The state’s biggest hotel market, Los Angeles County, also had a big jump in demand.
LA’s 14.7 million nights sold were up 4.9% in a year, the fourth-best growth in the state. Its 71% occupancy ranked No. 2. Room rates ran $198 per night (No. 12), up 3.1% in a year (No. 22).
Bottom line
These hotel trends favoring urban settings are in line with post-pandemic, back-to-normal patterns seen across many slices of the economy.
Hotel customers are returning to California’s metropolitan hubs because of increased office work and more corporate travel. Restrictions on inbound foreign travel ended and big cities are popular with international visitors. Plus, a pandemic push to vacation away from crowded urban settings has slowed.
Look what my spreadsheet tells me about the hotel business in California’s 10 biggest hotel markets vs. the other 35 counties.
Demand: It’s up 4.7% for the top 10 in a year vs. a drop of 4.4% in the other 35 counties.
Occupancy: That demand helped fill 69% of the top 10’s rooms – a 2 percentage-point improvement in a year. Occupancy ran just 61.5% in the other 35 counties, off 2.7 points in the 12 months.
Price: Those trends allowed owners in these 10 markets to push room rates up 6.2% to $193 a night vs. a 1.1% gain to $172 in the other 35 counties.
I will note that California hotels fared slightly poorer than the nation as a whole.
California’s 68 million hotel nights sold was up 1.7% in a year vs. 634 million nationwide, up 2.6%. But California hotels were 67% full vs. 63% occupancy across the U.S.
And, to no surprise, the state was a pricier stay – $188 per night, up 4.9% in a year – compared with the U.S. room rate of $154, which is up 6.2% in a year.
Locally speaking
Here’s how the other members of the top 10 counties fared in 2023’s first half, ranked by their demand growth in a year …
Santa Clara: 3.4 million nights sold, up 5.2% (No. 3 among the 45 counties) with 61% occupancy (No. 26). Rates ran $174 per night (No. 15), up 14.1% in a year (No. 1).
San Mateo: 2.1 million nights, up 4.8% (No. 5) with 68% occupancy (No. 7). Rates ran $184 per night (No. 13), up 9.8% in a year (No. 5).
Orange: 7.6 million nights, up 4.4% (No. 7) with 71% occupancy (No. 3). Rates ran $206 per night (No. 7), up 5.4% in a year (No. 11).
San Diego: 8.5 million nights, up 3.6% (No. 8) with 74% occupancy (No. 1). Rates ran $202 per night (No. 9), up 5.2% in a year (No. 13).
Alameda: 2.3 million nights, up 3% (No. 10) with 65% occupancy (No. 16). Rates ran $141 per night (No. 22), up 7.6% in a year (No. 7).
Sacramento: 1.8 million nights, up 2.2% (No. 11) with 68% occupancy (No. 6). Rates ran $146 per night (No. 20), up 9.5% in a year (No. 6).
Riverside: 3.7 million nights, up 1% (No. 12) with 69% occupancy (No. 5). Rates ran $198 per night (No. 11), up 2.3% in a year (No. 27).
San Bernardino: 2.7 million nights, off 0.6% (No. 17) with 67% occupancy (No. 9). Rates ran $125 per night (No. 29), up 3.1% in a year (No. 21).
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]