As COVID-19 ravaged the nation, the hotel and hospitality industry was among the hardest hit, experiencing major losses in 2020.
However, hotels in the Santa Clarita Valley have been able to make a rebound, with occupancy rates going up gradually and recently starting to stabilize to pre-pandemic levels, according to Evan Thomason, an economic development associate with the city of Santa Clarita.
“As our economy rebounds, the hotels are certainly coming back, and they’re getting business,” Thomason said. “We’re hoping with the state opening up, that’ll mean even better things for the hotels.”
In the SCV, hotels were aided by the film industry in surviving the last year, as film productions used local hotels to create their own bubble, in some cases renting out the entirety of a hotel for a number of weeks to house their crews.
Holly Schoeder, CEO and president of the SCV Economic Development Corp., said with many predicted to keep travel within driving distance, it presents the perfect opportunity for the SCV with Six Flags Magic Mountain reopening locally.
In addition, new hotels have hit the market in the SCV, and this, as well as the theme park’s reopening, have community leaders hopeful for the continued revival of the hotel and hospitality industry.
In March, hotel occupancy rates in the city of Santa Clarita were reportedly at 82.1%, which was a return to the city’s over 80% average pre-pandemic, Thomason added.
While these rates seemed to drop in April, with 65.1% occupancy reported, Thomason said these figures were misleading, as this was when new hotels came online but weren’t counted.
In fact, the city collected more transient occupancy tax in April than in March, meaning more rooms were rented, Thomason added.
Coming back from ‘rock bottom’
Hotels hit “rock bottom” in April 2020, with a low of 18% occupancy in Santa Clarita, Thomason said.
Nationwide, the pandemic was devastating to the hospitality industry workforce, which was down nearly 4 million jobs compared to the same time in 2019, according to data from the U.S. Bureau of Labor Statistics.
Then, after an already brutal year, the resurgence of COVID-19 outbreaks and renewed travel restrictions at the end of 2020 meant the hotel industry continued to face a significant decline.
Hotel occupancy rates for the city of Santa Clarita illustrated the reopenings and closures, with occupancy rates dropping from 73.6% in October to a low of 46.7% in December.
An American Hotel & Lodging Association survey conducted in November found that 77% of hotels reported they’d be forced to lay off more workers, while 71% of hoteliers said they wouldn’t survive another six months without federal assistance.
Since then, the industry began to rebound again, with around 200,000 jobs expected to be filled this year, per the Bureau of Labor Statistics.
However, the bureau reported that the accommodations sector faces an 18.9% unemployment rate, remaining nearly 500,000 jobs below the industry’s pre-pandemic employment level of 2.3 million employees, according to the AHLA’s 2021 forecast report.
In addition, the AHLA report indicated that half of U.S. hotel rooms are projected to remain empty in 2021.
New hotels hitting market in SCV
While leisure travel is expected to return first, with travelers optimistic about the state’s reopening, and 56% of Americans saying they are likely to travel for leisure or vacation in 2021, per AHLA reports, business travel, which comprises the largest source of hotel revenue, is forecasted to remain down and not expected to return to 2019 levels until at least 2023 or 2024.
“I, for one, am a little more bullish on business travel recovering faster than people have suggested … because I think the value of actually being with your customers, with your vendors, is really important to business transactions,” Schroeder added. “Businesses are going to want to be back out talking to their customers and rebuilding and shoring up those relationships, and that’s going to be part of what brings back business travel sooner than others have predicted.”
“As we enter the summer, people are eager to get out and start traveling,” Thomason said. “We have always been a strong drive market, and that is really the first segment of travel that we will see a very large increase in and already have seen.”
With new hotels hitting the market in the SCV as the state prepares to fully reopen, city of Santa Clarita officials expect occupancy numbers to remain in the 70-80% range this summer.
Of the new hotels are the Hotel Lexen in Newhall, as well as the newly constructed hotels on Wayne Mills Place near Magic Mountain, including Holiday Inn Express and Best Western.
The number of hotel rooms within city limits has increased by more than 35% since April, with there now more than 1,100 hotel rooms in the SCV and more expected to open by the end of the year, according to Thomason.
While adding these rooms will mean occupancy rates will initially drop, as seen in the city’s April figures, Thomason said revenue will increase, which is a significant factor in the city’s budget.
“When we’re operating normally, the transient occupancy tax from the hotels generates over $3 million a year that goes directly into the general fund, so that’s a big deal,” Thomason added. “With the new hotel rooms coming online, we expect that to increase once the numbers stabilize.”