United States -  Los Angeles - Long Beach

Los Angeles, California, is a major global center for business, entertainment, international trade, media, fashion, science, technology, and education. The Los Angeles hotel market (defined as Los Angeles County) includes a variety of dynamic hotel submarkets, ranging from world-famous luxury destinations in Santa Monica and Beverly Hills to smaller and more industrial areas to the south in Long Beach and to the east in the San Gabriel Valley. Each submarket has its own unique set of demand drivers and barriers to entry, but as a whole, the Los Angeles market has recorded strong growth over the last several years, with the county reaching a new record of 48.5 million visitors in 2017. Market-wide occupancy reached 80% in 2017, decreasing roughly 1.0% from the prior year, largely due to the additions of new supply in 2017. Nineteen hotels with a total of 3,880 rooms opened in Los Angeles County in 2017. Market-wide average rate (ADR) was roughly $176 in 2017, approximately $5 higher than the rate posted for 2016, which resulted in peak RevPAR performance of roughly $141.

Los Angeles is experiencing a period of economic strength and expansion, primarily led by the tourism industry and ongoing development projects. The area benefits from optimal year-round weather conditions, as well as miles of beaches. The expansion of the Metro system should support this trend. Additionally, a $3-billion stadium is currently under construction in Inglewood; it will be the new home of the recently relocated Los Angeles Rams and former San Diego Chargers for the 2020 season. Looking forward, operators are anticipating further declines in occupancy in 2018 because of the addition of new supply. Further moderation in occupancy is expected in 2019 and 2020, as the market absorbs new supply and stabilizes to supportable occupancy levels. Meanwhile, ADR is anticipated to continue to increase because of new luxury and upper-upscale hotel supply, which will shift the market's product mix; strong corporate demand; and continued growth in overall visitation.

The Los Angeles market continues to receive a wave of long overdue new supply. Most of this new supply is concentrated in the Downtown submarket, where over 5,000 hotel rooms are in various stages of development. Several other submarkets are recording new supply growth, as well, including South Bay, Santa Monica/Marina Del Rey, Beverly Hills, Westwood, West Hollywood, Hollywood, San Gabriel Valley, and Playa Vista. Notable hotel openings in 2017 included the 350-room Hotel Indigo, 167-room Freehand Hotel, 889-room InterContinental Hotel, and 170-room Waldorf Astoria Beverly Hills. In addition, the 241-room NoMad Los Angeles and 105-room Kimpton opened in early 2018. Hotels currently under construction include the 176-room AC Hotel by Marriott Los Angeles and 179-room Hyatt Place Glendale. With supply entering the market, positive expectations for RevPAR growth, and a modest increase in capitalization rates, Los Angeles/Long Beach hotel values are forecast to remain relatively stable in the near term.

Similar to the U.S. trend, transaction volumes in Los Angeles County decreased in 2017, compared to 2016. However, the investment landscape continues to show brokers and bankers hungry for good-quality assets, specifically in the Beverly Hills, West Los Angeles, and Santa Monica hotel markets. Seventeen hotels representing approximately $629 million in transaction volume sold in 2017, including such assets as the DoubleTree by Hilton Los Angeles Downtown for $115 million and Sunset Tower Hotel for $92 million ($1.1 million per room). Thus far in 2018, four hotels have transacted, including the Hotel MdR Marina del Rey - a DoubleTree by Hilton, which sold in May for $85 million, and the $100-million transaction of the Sheraton Grand Los Angeles in April. The outlook for the Los Angeles/Long Beach market is positive due to anticipated high-quality hotels entering the market, visitation expectations for the county, the strong base of corporate demand, and favorable economic conditions throughout Southern California.

* Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent “big picture” data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Change In Value For Market:

Legend
Significant Value Increase: Greater than +10%
Moderate Value Increase: Between +3% and +10%
Stable Values: Between -3% and +3%
Moderate Value Decline: Between -3% and -10%
Significant Value Decline: Less than -10%

Los Angeles - Long Beach RevPAR Change

Los Angeles - Long Beach RevPAR

Year RevPAR
2007 $92.04
2008 $91.09
2009 $73.35
2010 $78.94
2011 $88.43
2012 $98.29
2013 $105.12
2014 $116.00
2015 $126.08
2016 $139.60
2017 $140.86
2018 (f) $145.73
2019 (f) $150.80
2020 (f) $156.83

For more information, please contact:

Jessica White
[email protected]
  • +1 424 208-1262 (w)
Li Chen, MAI
[email protected]
  • +1 310 755-8293 (w)
Greg Mendell
[email protected]
  • +1 203 561-6094 (w)