Hotels stay booked amid recession

Adapting to times: High-end hotels like the Hyatt in San Francisco have lowered room rates to levels that are compatible with more travelers, thus keeping occupancy rates up. (Examiner file photo)

SAN FRANCISCO — When Oklahomans Patty Woodward and Faye Hall were looking for a moderately priced hotel to stay in during their vacation in San Francisco, they did some Web research and found a few options that seemed reasonable.

Then, on a whim, they decided to call the Hyatt Regency and asked if they could get a deal for a week.

To Hall and Woodward’s delight, the Hyatt offered them a nightly rate of just $85 for four days and $132 for the rest of the week, which fit their budget.

“We were extremely surprised,” Hall said as the pair waited in line for the California Street cable car. “We expected it to be double that or more.”

Hall and Woodward’s experience is a common one this summer, as San Francisco hotels have kept tourists coming by slashing prices,
San Francisco Convention and Visitors Bureau Executive Vice President Leonard Hoops said.

The tourism industry is a huge boon for city coffers. In 2008, it generated more than $527 million in taxes, although that total is expected to drop this year due to the economic downturn.

Yet despite the recession, The City’s hotels have managed to keep bookings up in recent months. In the last week of July, the San Francisco-San Mateo area had the highest hotel occupancy rates of the nation’s top 25 markets, according to data compiled by Smith Travel Research.

Local hotels have lowered room rates more than most metro markets, data showed. In the last week of July 2008, the average hotel room in the San Francisco-San Mateo area cost $158. A year later, that price has tumbled nearly 18 percent to $130.

The only other major metro market that saw a steeper decline in hotel room prices during that period was New York City, where rates plunged 28 percent, from $258 to $184, Smith Travel Research reported.

Hotwire.com, the discount arm of Internet travel company Expedia, expects hotel prices around the nation to continue falling in September, led by cuts at five-star hotels. Hotwire allows travelers to book hotels by location and description at cheaper-than-advertised rates by withholding the property name during selection.

Lowering room prices in The City, however, hasn’t completely brought back last year’s market, Hoops said. The San Francisco-San Mateo area’s 83.8 percent occupancy rate is higher than many other major market nationwide, but it’s still lower than last year’s 87.7 percent.

San Francisco hotels don’t like dropping prices too much, but an empty room doesn’t make any money at all, Hoops said.

“Overall, The City’s doing a decent job filling rooms,” he said.

Trends in hospitality industry

Hotel rates and occupancy for the week of July 26 to Aug. 1:

Source: Smith Travel Research Hotel Review, provided by San Francisco Convention and Visitors Bureau



kworth@sfexaminer.com

Bloomberg News contributed to this report.