Since 2010, California’s hotel industry has grown phenomenally with new builds and significant hotel technology renovations completely changing the way guest experiences are delivered. According to BisNow, California has experienced 41% (183 new hotels) growth in new hotel builds, while new room construction increased by 42% (25,872 new rooms) in 2018.
Robert A Rauch mentions in his article that hotel owners can expect up to 3% increase in revenue per available room, which he claims is largely attributed to average daily rates (ADR).
Threats to California Hotel Industry Growth in 2019
In his brilliant Lodging forecast summary, Rauch does mention that there are considerable threats that should be actively monitored. These are warning signs that hotels must account for when budgeting demand and supply.
The list of threats that Robert Rauch mentions include:
- Interest Rate
- Stock Market Shocks
- Cost increases
- Slow global growth
- The growth of Airbnb
- Labour shortages
Bernard Baumohl, Chief Global Economist for The Economic Outlook Group, established that Donald Trump’s trade crusades against the world will be a major slowdown factor for U.S. hotels in 2019.
Baumohl even predicts a “recession” to hit the U.S. economy by the end of 2019, with average household debt increasing and tax reforms that could not motivate a spending boom.
Los Angeles Rising
Los Angeles has been the most popular tourist destination in California, explaining the massive growth in hotel new builds developments, renovations, and hotel I.T. solution providers. Even basketball legend Kobe Bryant declared L.A as the sports capital of the world during this time adding to the appeal of the glorious city.
L.A. has also established itself as a popular culinary destination and a cultural center in North America. The city adopted a new global campaign “L.A. Loves”, establishing the city as a welcoming and hospitable tourism destination.
Los Angeles, California has already recorded 36 hotel new builds, with a further 19% growth expected by the end of the year. L.A. leads the hospitality race in California with 45 hotels (with 7,497 rooms) under construction and 268 hotels (with 40,190 rooms) in planning.
Over the 2018 fiscal year, Los Angeles was booming so erratically that it overtook all other California cities in growth. The city hosted 50 million tourists, a number that was forecasted just two years ago. This was also 1.5 million (+3.1%) more tourists compared to 2017.
Hotel Technology Management to Boost Hotel Industry Growth
Hotel technology management is quickly picking pace in California with significant hotel new builds and hotel technology renovations underway.
Advanced Hospitality Technologies Inc. has been privileged to have been contracted for various technology renovations and new builds in the last 5 years. Working with popular brands including Marriott, Hilton, and Sheraton our expert General Contractors of Technology have delivered highly advanced hotel new builds.
One of the most popular transformations that hotels require are the strategic and policy changes needed to hotel processes, claims Mohammed Ziaee – Director of Technology Advanced Hospitlaity Technologies Inc. These changes centre around the new millennial traveller, he claims.
Mr Ziaee also establishes the tech explosion and international tourists coming to the US, especially California. These travellers are highly tech-savvy and demand seamless tech amenities from hotels. These tourists have multiple smart devices, they enjoy digital entertainment, and they are highly influenced by services assisted by technologies like mobile keys and automated housekeeping robots.
Since we are discussing California, eco-friendliness is also a major challenge for the hospitality industry. Hotels are bound by laws and tourist expectations to be more environment-friendly. Mr Ziaee emphasizes the power of technology in achieving expected sustainability goals.
In the end, Mohammed Ziaee did comment about the shortage of qualified technology resources and hoteliers who are already well versed with modern travelling habits. There is a major shortage he claims, and this gap must be filled through relevant training and on the job learning.
I hope you enjoyed our latest news insight on the growth of California hotel industry in 2019. There are great opportunities but with slower global growth and impending trade wars, we can expect the California hospitality industry to slow down.
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