High Occupancy Rates in Southern California Hotels

We are doing a catch-up on the Southern California hotel industry, reporting both November and December data provided by PKF Consulting.  Los Angeles County’s hotel occupancy rate in November was 74.0% compared with 75.5% in November 2006, but the average daily room rate (ADR) rose by 6.0% over the year to $154.24.  In December, the occupancy rate was 64.3% compared with 62.5% last year, while the ADR increased by 8.8% to $152.99.  By area in the County during December, the highest occupancy rate was found in I-5 Corridor/Whittier (a business market) at 71.7%.   For the full year 2007, the County’s occupancy rate was 78.0% compared with 77.4% in 2006.  The 2007 ADR was up by 8.4% to $156.88.

Orange County’s November occupancy rate was 68.9% compared with 70.0% a year earlier.  The ADR for the month rose by 8.5% over the year to $154.74.  In December, the occupancy rate was 63.0% compared with 68.3% a year ago.  However, the ADR increased by 5.3% to $141.78.  By area in the County, the highest December occupancy rate was found in Anaheim at 68.1%.  For the year 2007, Orange County’s hotels had a 74.9% occupancy rate compared with 74.8% in 2006.  The ADR increased by 8.4% to $153.90.

San Diego County’s hotels had a 73.5% occupancy rate in November 2007 compared with 68.6% a year earlier.  The ADR rose by 3.0% over the year to $167.57.  December was disappointing, with the occupancy rate at 55.6% compared with 55.0% a year ago, while the ADR eased down by 0.9% to $142.25.  By area the highest December occupancy rate was the South Bay’s 65.5%.  For the year 2007, San Diego County’s occupancy rate was 76.3% versus 76.4% in 2006.  The ADR for 2007 increased by 5.0% to $174.66.  (Jack Kyser)

 

Los Angeles Customs District Remained #1 in the Nation

The December trade numbers for the state’s three customs districts were a mixed bag.  At Los Angeles, export values were up by 16.4% over December 2006, while import values rose by 5.9%.  Total two-way trade value for the month was up by 9.0% over the year to $29.9 billion.  The San Francisco District saw export values increase by 7.5%, but import values fell by -0.9% over the year to December.  Total two-way value was up by 2.4% to $9.8 billion.  At the San Diego District, export values declined by -1.3% over the year to December while import values rose by 3.5%.  Total two-way trade value rose by 2.2% to $4.3 billion.

For the year 2007, the Los Angeles Customs District retained its number one ranking in the nation, with total two-way trade value up by 6.1% to $349.4 billion.  The New York District was second, with an increase of 9.8% to $323.9 billion.  Detroit was a distant third, with total trade value rising by 3.6% to $247.1 billion.  The Houston District was fourth, with a tasty 14.2% gain to a 2007 total of $185.3 billion.  And the New Orleans Customs District jumped up to 5th with a 14.6% gain to $175.3 billion, reflecting its recovery from hurricane damage.

The San Francisco District retained its 8th place ranking, with a modest gain of 1.0% to $112.2 billion.  The San Diego District does not rank in the top ten.  In 2007, it recorded a 6.7% increase in two-way trade value to $54.2 billion.  (Jack Kyser)  

 

U.S. Housing Watch -- Starts for Multi-family Sector Up in January

The U.S. Census Bureau reported last week that U.S. housing starts edged up by 0.8% in January to 1.01 million units (seasonally adjusted annual rate or SAAR), after plunging by -14.8% in December.  Construction was started on about 743,000 single-family homes in January, down by -5.2% from December—and the lowest level for single-family starts since January 1991.  In the multi-family sector (apartments and condominiums), some 269,000 units were started last month, up by 22.3% from 220,000 units in December.

Total housing starts peaked back in January, 2006 at 2.29 million units, according to the Census Bureau.  Starts reached a new low for this downturn in December.  January activity was down by -52% from the peak quarter (1q2006).  Single-family and multi-family starts were down by -58% and -29% respectively. 

The underlying fundamentals in the housing industry continue to be negative.  The latest monthly survey of homebuilder attitudes taken by the NAHB (National Association of Home Builders) was up a smidge this month but continued near the record low level set in November (data go back to 1985).  About four-fifths of the builders reported slow sales, and 81% complained about low buyer traffic.  Expectations for future sales also remained downbeat. 
Lenders’ stricter standards for granting all types of mortgages haven’t helped the situation.  It’s become harder for would-be homebuyers to find mortgages at favorable rates, and subprime and jumbo loans are especially difficult to find.  Most builders and industry observers expect housing construction activity to move down some more from here.  They disagree though on how much farther starts will fall and how long it will take until the bottom is reached.  The “optimists” expect the trough in new construction will be reached this spring, while the “pessimists” forecast declining starts throughout 2008 with a bottom in 2009.   (Nancy D. Sidhu)

PR:  http://www.census.gov/const/newresconst.pdf

 

Food and Energy Prices Increased in January

The Los Angeles MSA (LA-Riverside-OC) Consumer Price Index (CPI) rose by +0.7% over the previous month in January, following a -0.3% decline in December.  The index was +3.9% higher than a year ago, mostly hitting consumers with what they need the most -- food (esp. groceries), gas utilities, and gasoline prices.  Local CPIs are not seasonally adjusted.   Grocery prices shot up by +2.3% between December and January and were up by +7.1% over the year (the largest year-over-year increase since January 1997).  Though home electricity prices decreased by -1.7% in January, gas utility prices on the other hand increased, rising by +7.7% and by +13.9% over the past year.  Gasoline prices decreased by -1.5% over the month, following a -3.6% decrease in November, but were up by +26.2% from January 2007.  Medical care costs were higher as well, up by +1.6% in January and up by +3.4% versus a year ago.

The U.S. Consumer Price Index (CPI) rose by +0.4% in January (seasonally adjusted).  The CPI was up by +4.3% from January 2007, well above the Fed’s “comfort zone”.  Food prices were higher in January, rising by +0.7% from December 2007, the largest month-to-month increase since February 2007.  Fruits and vegetables posted the highest increase in the food category over the month, rising by +2.2% and up by +6.1% from January 2007.  Dairy product prices (including milk, cheese, ice cream, etc.) were a tad higher than the previous month, up by +0.2%, and were up by +12.8% over the year.
 
Energy prices rose by +0.7% during January, following a +1.7% increase in December, and were up by +19.6% from January 2006.  Gasoline prices rose by +1.2% in January and were up by a whopping +34.5% from a year ago.
     
Excluding food and energy prices, the core CPI rose by +0.3% in January, following a +0.2% increase the previous month.  The core index has risen by +2.5% over the past year.  Medical care costs rose by +0.5% last month compared with a +0.3% increase in December, and were up by +4.9% from a year ago.   (Candice Flor Hynek)

US PR: http://www.bls.gov/news.release/cpi.nr0.htm
LA PR: http://www.bls.gov/ro9/cpilosa.htm