About San Francisco's Hotel Business in June? Well, It Was Better Than May

San Francisco, CA. August 8, 2002. The hotel business in the San Francisco Bay Area, and by extension, Northern California, has recently been the target of media scrutiny. The press reports that Bay Area hotels are in deeper economic doldrums than their counterparts in any other major city in the country. PKF Consulting's Northern California Monthly Hotel Trends for June helps to address the obvious question, How bad is it? The answer is - it's been worse, but June looked a little bit better.

For the first six months of 2002, Northern California occupancies are down 15.1 percent, as compared to the first half of 2001. Room rates are down 9.4 percent compared to the first half of last year. Hardest hit in Average Daily Room Rate for the first half of 2002 is the San Francisco Airport area, down 26.5 percent over the first six months of last year. Suffering the greatest occupancy drop is San Francisco, down 14.5 percent from the first six months of 2001.

But, if you look at this June's numbers, there's a ray of light. The second quarter of 2002 has ended on an upbeat. Occupancies in San Francisco went from 68.0 percent in April to 65.6 percent in May, then jumped to 74.2 percent in June.

A similar pattern held for Oakland/East Bay - 62.1 percent in April, 55.7 percent in ugly May, and a jump to 66.8 percent occupancy in June. The same three months were not as kind to San Jose/Peninsula - 64.6 percent in April, 59.3 percent in (dammit!) May, and 64 percent occupancy in June.

Just to show that gloom isn't bustin' out all over, June was good to Sacramento, which enjoyed a spike in both room rate and occupancy. Room rates went up slightly in Monterey/Carmel, and occupancies jumped in Napa/Sonoma and Other Northern California. These last three upswings perhaps speak to increased automotive travel for June. (Would that more visitors drove across the bridges into San Francisco!) As for Sacramento - well, state capitals usually have different drummers.

Where's all this leading? Looking beyond the month-by-month, The Hospitality Research Group of PKF Consulting ( HRG), in concert with Torto Wheaton Research (TWR), is projecting a turnaround for San Francisco - at least for full-service hotels - by the end of the Third Quarter of this year. And they forecast recovery for San Francisco, again, for the full-service sector, by the Third Quarter of 2003. The current results for June portend well for such a conclusion. Trends regional forecasts of occupancy and average daily rate are available from Hotel Outlook, the econometric forecasting model jointly developed by HRG (www.hrgonline.com) and TWR (www.tortowheatonresearch.com.)

PKF Consulting, an international consulting and real estate firm specializing in the hospitality industry, is based in San Francisco, with offices in New York, Boston, Philadelphia, Washington DC, Atlanta, Houston, Dallas, Los Angeles, and Singapore. The Hospitality Research Group (HRG), headquartered in Atlanta, is the research affiliate of PKF Consulting.

Logos, product and company names mentioned are the property of their respective owners.

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