For a comprehensive review of the United States market, click below:
HVS In-Depth United States Hotel Valuation Index:
Los Angeles, California, is a 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 50 million visitors in 2018. Market-wide occupancy reached 79.6% in 2018, decreasing from the prior year, largely due to the additions of new supply in 2018. Fifteen hotels with a total of 1,985 rooms opened in Los Angeles County in 2018. Market-wide average rate (ADR) reached a new peak of $180 in 2018, approximately $4 higher than the rate posted for 2017, which resulted in peak RevPAR performance of roughly $143.
Los Angeles is experiencing a period of economic strength and expansion, primarily led by the tourism industry, the technology sector, and ongoing development projects. The area benefits from optimal year-round weather conditions, as well as miles of beaches. The city is also home to over 200 million square feet of office space, as well as the ports of Los Angeles and Long Beach, which consistently rank as the top two busiest container ports in the United States. Additionally, a $3-billion NFL stadium is currently under construction in Inglewood; it will be the new home of the Los Angeles Rams and Chargers for the 2020 season. Looking forward, operators are anticipating further declines in occupancy in 2019 because of the addition of new supply. Further moderation in occupancy is expected in 2020 and 2021, 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.
Hotel transaction volume in the Los Angeles market was robust in 2018, with a total of 26 transactions during the year, representing an increase of 30% over the prior year. The investment landscape continues to show brokers and lenders hungry for quality assets, specifically in the Beverly Hills, West Los Angeles, and Santa Monica hotel markets. The most notable sales of 2018 included the 162-room Viceroy Santa Monica, which transacted as part of a portfolio for an allocated price of $157 million ($970,000 per room) and represents the sale with the highest dollar amount in 2018, as well as the 253-room DoubleTree Guest Suites Santa Monica, which transacted for $155 million ($611,000 per room). The outlook for the Los Angeles/Long Beach market is positive due to anticipated high-quality hotels entering the market, the market's high barriers to entry, 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.
The widespread impact of the coronavirus (COVID-19) has had an unprecedented impact on hotels and hotel values worldwide.
Consequently, the latest HVI analysis may no longer reflect the most current measure of lodging industry strength or the
hospitality investment market.
In each of our offices across the globe, we are working tirelessly to analyze the impact of recent events and provide timely
insights to help you navigate these uncharted waters. Because it is unclear how long the pandemic will last or how long related
restrictions will be in place, we are updating our analyses on a weekly basis using the most current data.
Additionally, examination of value trends in prior cycles can provide useful information. Historical patterns, together with
an understanding of the market’s current expectations for the eventual recovery of the industry and its performance, can provide
insights on the likely trajectory of decline and recovery for hotel values.
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ADR, Demand, Occupancy, RevPAR, and Supply Projections:
|Market Demand Change
|Hotel Occupancy Increase/Decrease
|Market Supply Growth