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Southern California Hotels Seeing Occupancy Gains,
but Room Rates Remain at Bargain Levels

By Jeff Rowe, North County Times, Escondido, Calif.McClatchy-Tribune Regional News

Mar. 30, 2010--Hotel visitors appear to be coming back in Southern California -- and few are more grateful than A.J. Patel, general manager and owner of the Best Western Lake View Inn & Suites in Lake Elsinore.

As have hoteliers around the nation, Patel suffered grievously during the Great Recession. From November through January, occupancy fluttered between 20 and 30 percent, near-catastrophic for a hotel.

In February, though, occupancy nudged near the 40 percent level, close to the break-even zone for the hotel, Patel said.

And if the trend continues and Lake Elsinore can deliver on ambitious plans to build up its tourism district, Patel and the city's other hoteliers may have real reason to cheer.

Figures from PKF Consulting in Los Angeles give them reason for optimism.

Los Angeles-based PKF said its January figures showed occupancy at hotels in Western Riverside and San Bernardino counties fell by just 0.3 percent in January, as several rainy weekends doused occupancy at Temecula-area hotel. PKF said San Diego County North Coastal hotel occupancy rose almost 10 percent compared with the same month a year earlier.

Hotels in Southern California should see slow improvement in occupancy in coming months, said Brandon Feighner, an analyst with PKF. Room rates will be slower to rise, he said, because hotels lack the occupancy demand to command a higher tab.

Room rates at the Best Western Lake Elsinore, for example, begin at $74. In June 2007, when the hotel opened, its lowest rate was about $89. About three months later, the hotel started feeling the tremors of the recession.

A return to pre-recession room rates probably is unlikely before 2012, said Mark Kallenberger, a Costa Mesa-based hotel consultant.

"Corporate profits are up, so business is starting to come back" to hotels, he said. "But leisure travel will not be back until employment rises."

That, too, has been a slow chapter of the recovery.

Patel's challenge is greater, because the future of his hotel is closely tied to Lake Elsinore's plans to remake itself as a destination.

Back in 2003, when the economy was building toward its crescendo in 2006-2007, Patel bought 4 acres on the hillside just west of I-15 and a few hundred yards from The Diamond stadium, where the minor league Lake Elsinore Storm plays.

It looked like a shrewd move.

But the independent hotel about 100 yards south converted to a Quality Inn, and the nearby Lake Elsinore Hotel & Casino across the street from the Quality Inn is "extensively" renovating, according to the hotel's Web site.

Last year, a Holiday Inn Express opened on the other side of the freeway.

Suddenly, Patel's plans were looking less sure.

Long-term, though, the city's tourism future is bright, according to the Lake Elsinore Valley Chamber of Commerce Visitor Bureau.

Plans include a pier and a boardwalk at lakeside, all connected to Main Street and a visitor district stretching to the stadium area, which the bureau envisions becoming a hub for a range of sports and other events.

In the long haul, "we're woefully short of beds," said Matt Norkin, marketing director for the chamber. He reckons the city needs at least 500 hotel rooms to be competitive in attracting events. That's about twice the room total now.

For special events, such as Lake Elsinore's Frontier Days next month, filling the Best Western and the other hotels has been relatively easy. During weekends and events in Wine Country east of Temecula, Lake Elsinore gets some spillover visitors. Also next month, the Warrior Dash race is expected to draw 8,000 participants, organizers said. The race along the lake will start and finish at the stadium.

"The trick is filling the gaps," Norkin said.

For now, keeping the hotel going requires 100-hour weeks of Patel. He starts each day at 7 a.m. working the front desk and then transitions into maintenance man in mid-afternoon. He finishes the workday at about 10 p.m., he said.

When was his last day off? Patel said he could not remember.

For more information, visit

Call staff writer Jeff Rowe at 760-740-5417.


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Copyright (c) 2010, North County Times, Escondido, Calif.

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