RevPAR growth in Los Angeles was the highest in the US in 2016
In 2016, the average growth in revenue per available room (RevPAR) for hotels across the U.S. was 3.2 percent, according to STR. That was down from 2015’s 6.3 percent growth rate and just under the U.S. average for the past 30 years, which was 3.3 percent. However, some markets saw RevPAR growth well above the national average; of these, Los Angeles saw the top growth rate. Los Angeles’ RevPAR grew by 10.8 percent to $139.65, making it the only market to see double-digit RevPAR growth last year.
Patrick Lee, an assistant professor at The Collins College of Hospitality Management at California State Polytechnic University, points to the InterContinental Los Angeles Downtown as an example of an important property slated to enter the market soon. According to the Los Angeles Times, the InterContinental will have 900 rooms and will open in June. The Los Angeles Times also reports that hotels across Los Angeles County are expected to add nearly 6,000 new rooms in 2017 and that the 2016 occupancy rate was 81 percent.
Although Lee says RevPAR growth is good for hotel developers, he cautions that it does not necessarily translate into new job opportunities because hotel operators also look at expenses and try to keep costs down. Some significant expenses for hotels in Los Angeles are taxes and rising labor costs due to the increasing minimum wage.
Lee explains that hotels are trying to rely on technology rather than hiring more people, both to keep costs down and because guests prefer it.
One department that’s affected by technology is the concierge. “The concierge size is comparatively smaller and smaller right now, because a lot of travelers prefer to use Yelp instead of asking the concierge [for a] restaurant recommendation,” Lee says. “Yelp has better reliability [than] the individual recommendations of the concierge himself or herself.” Lee adds that apps and kiosks are allowing hotels to employ fewer front desk associates and room attendants because procedures like checking in or ordering a toothbrush are being automated.
Lee notes that in other areas, employees cannot be replaced by technology so easily. An example is the spa; guests who visit a spa expect personal attention from human beings, not apps. Event planning is another department in which jobs are relatively safe. “There is still a lot of labor to fill up the meeting space, to deal with the contract and then to sell to customers,” Lee says.
Lee predicts that supply and demand for hospitality professionals in Los Angeles will remain consistent through 2017, with positions regularly opening up due to high turnover. Lee attributes some of this turnover to Generation Y employees, who he says often have unrealistic expectations about opportunities for promotion in the hotel industry. “The consequence is that generation Y, when they know that there may not be a lot of chance for them to develop, that they may change to any other industry,” Lee says. “Around 30 percent of the graduates, in my experience, they work in real estate, they work in other industries, instead of in the hospitality industry or the food service industry.”