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Behind the scenes: LA’s strategies for long-term market growth

Forecasts of softer demand and downward pressure on margins over the next 12 months are taking the “happy” out of the new year for many of the nation’s hotel investors and operators. But, for Los Angeles’s tourism and hotel community, 2025 could be a showcase year for maximizing the pull-through on Tourism Master Plan initiatives designed to bolster occupancy and rate regardless of changing market dynamics.

Hotel Investment Today by Northstar recently gathered tourism, economic development and hotel experts to pull back the curtain on how they’re collaborating to create success strategies: from short-term demand around key promotions to long-term campaigns aligned with the city’s expanding domestic and international business base. 

Sharing best practices for how to thrive across economic cycles were: Adam Burke, president and CEO, Los Angeles Tourism & Convention Board (LA Tourism); Stephen Cheung, president and CEO, Los Angeles County Economic Development Council (LAEDC); Deepak Mehra, general manager, Conrad Los Angeles; Scott Mills, general manager, The Garland Hotel and Connie Wang, area managing director, Hotel Figueroa. The LA Tourism-sponsored roundtable was moderated by Mary Scoviak, custom and design content director, Hotel Investment Today by Northstar.

Quick pivots open way for long-term growth

Burke acknowledged the tourism community needs to be “incredibly agile” in responding to rapidly changing market timelines, influenced by factors such as a contraction of domestic leisure as travelers opt for Europe or Asia given the strength of the U.S. dollar and concerns for a potential recession instigating shorter lengths of stays and more drive trips. LA Tourism’s solution is to develop campaigns that target volume alongside the best possible rate. 

“The volume factor in our strategy is really about looking at what's happening with market dynamics in real-time. We started to see a softening of long-haul domestic travel,” said Burke. “We very quickly pivoted our marketing campaigns to much more short-haul and backyard drive markets. That's incredibly important because with the way we place our media, we can really turn on the dime. We worked with our local hotel community and our nearly 1,000 members to put together a host of special offers around all the events and activities happening now in LA and make the city more affordable and more accessible. And that's really driven demand which is generating that volume that we need.”

The innovative ‘Now Playing’ campaign, allowing travelers to choose three-day itineraries to experience, art and culture, film locations, or dining destinations, paid dividends for Hotel Figueroa, according to Wang. “We play a very visible part of the tourism industry as a whole, but really that campaign shined a light on local business as well. And so that we can all win together,” she said.

Other big wins are programs to boost this downtown LA hotel’s robust staycation market base and its allure for bleisure travelers looking for “something different,” she added. “Right now, 85% of our business is bleisure. With all there is to do in LA, I don’t see that reversing.”

LA is new focus for international business, intellectual capital

Although Los Angeles’s upcoming roster of global-caliber events, including the 2028 Olympic and Paralympic Games, keep the City of Angels in digital headlines, its massive business and educational institutional base underpins its high-profile events with long-term domestic and international market capture.

Cheung cited “a wealth of largely unsung demand drivers in the form of intellectual capital that provide positive impact for the region.”

“Most people don't know that Los Angeles…has three, Top 25-ranked universities in one single location,” he said, including the California Institute of Technology, University of California, Los Angeles and the University of Southern California.

“Together, [they have the] capability of attracting conferences and scientists from around the world just to basically learn what we're doing here,” said Cheung.

Notably, Caltech manages NASA’s Jet Propulsion Laboratory (JPL) in Pasadena, where a limited number of free in-person tours can be reserved for groups and individuals. 

“They're hosting folks to learn about how we operate the Mars Rover. And in order for that to be done — this is where the cross pollination comes in — you really need the artists that are in Hollywood to be able to draw and visualize the spacecraft and basically what's happening there so people can understand how the zeros and ones become images. That is creating a whole new industry,” said Cheung.

There also are approximately 180 higher-education institutions, 21 community colleges and the Cal State University system, providing a continued attraction for families, educators and international visitors to the entire region.

Medical tourism is another strong demand driver with five leading facilities in the region: Cedars Sinai, Children’s Hospital of Los Angeles, City of Hope, UCLA Medical and USC Keck Hospital.

“We worked very closely with LA Tourism because international visitors are looking for medical treatment. We've created multiple travel plans so that we can attract international visitors [who] are looking for pulmonary treatments and cardiovascular treatments that are unique to this entire region,” said Cheung. He added if surgery is involved, patients in recovery often have one or more family members accompanying them who may need to  arrange for extended hotel stays.

From tech and aerospace to biosciences and sustainability, business, medicine and education have all contributed LA’s GDP of close to $900 billion in 2023.

To put that into perspective, “If we were a country, LA County would be the 20th largest economy in the world. Our economy is larger than that of Norway, Belgium or Saudi Arabia,” Cheung said. 

MICE market braces for game-changing growth

“A lot of people don't realize just how important professional meetings and events are to Los Angeles,” said Burke. He said in 2019, LA had approximately $31 billion of economic impact from leisure visitors, and nearly $25 billion from professional meetings and events. “Certainly the fact that the City of Los Angeles is going to be modernizing and expanding the Los Angeles Convention Center (LACC) will be a huge driver,” he said, adding that the expansion will enable the facility to market to major conventions and meetings.

“People often think of a convention center as just benefiting the area that’s proximate to it, but actually, the compression it creates across the entire region is substantial,” he added. “Even before the modernization, certainly we see massive compression and an increase in RevPAR whenever we have a citywide. But what developers need to know is whenever we have a citywide convention, every region outside of downtown sees an increase of 3% to 5% of RevPAR, and when we're able to go after even bigger pieces of business with the expansion, that's going to be critically important in really helping to drive rate.”

Each of the roundtable’s hoteliers acknowledged efforts to appeal to meeting planners looking for more than just a “big box” to house attendees and host events.

“Our guests and our meeting planners are looking for unique experiences,” said Wang. “We’re really basing everything on making sure there's a real strong sense of time and place.”

They’re also looking for a destination that’s addressing some of cities’ biggest challenges. Burke said public/private sector initiatives have reduced homelessness 10% YOY since January 2024 and decreased encampments by 30% over that same period. Cross-departmental coordination played a role in a 25% reduction in violent crime. 

At the same, “prime” real estate is emerging in new areas. Opened in July 2022, Conrad Los Angeles is part of the Grand LA project, a $1.4 billion development that also includes residential and retail components. The hotel has demand drivers such as The Broad, MOCA, The Music Center in the arts corridor and is proximate to the Crypto.com Arena. Mehra noted it has become a magnet for those seeking a luxury experience in Downtown Los Angeles, and he anticipates the property will achieve close to 70% occupancy at year’s end.

“To gain that much market share in the second year of operation is incredible,” he said, noting the 305-key property has been able to shift some of the luxury market share from Beverly Hills and West Hollywood, and draw in celebrities from the entertainment and sports industries.

“Besides the leisure travelers, groups, events and conventions are very important for the success of the property but also when it comes to profitability,” said Mehra, who noted the Conrad competes with some of the “big, big hotels” proximate the convention center. “Only when those hotels get a compression, [do] we get the benefit out of it.”

To attract greater demand, the property is considering expanding its ballroom space

“It’s critical. We need to have at least 20%, 25%, 30% group house in order for a luxury property to be profitable…We have the immense cost that a luxury hotel [has] in terms of giving that level of service. We need this group business to create that profitability for ownership. When a pro forma is put for a luxury hotel, one of the biggest drivers is the rate and, frankly speaking, we are struggling a little bit on the rate because we are competing with hotels in West Hollywood, hotels in Beverly Hills and we’re trying to shift that share of the business.”

Entertainment endures, matures to markets from families to CEOs

Family-owned independent, The Garland, provides a backdrop across seven acres for a variety of activities that encourage self-contained meetings in a residential setting.

“We're very lucky to be right by Universal Studios, Warner Bros., the NoHo Arts District and the Hollywood Bowl. So, we're able to ‘package’ if someone wants to do a two-, three-, four-day event,” said Mills. Having so much space allows the 260-key property to customize events with offerings such as food trucks, bars, live music and more. “It’s all self-contained here; that capture is huge,” he said. Similarly, The Garland’s dedicated movie theater helps capture some 92% of group attendees who are in house for a film/TV presentation.

“In the past [group business planners] would try to do the meetings during the day, have dinner, then get everyone to get on a bus to go to a theater. The result was that they’d lose about 50% of their attendees,” observed Mills.

“Obviously, there’s different needs, wants and desires, but we check the box for all those that want to be creative and different outside the box and really have something fun and different,” he said.

When it comes to a long-standing visitor staple, celebrity-centric Hollywood does remain an attraction; however, the entertainment sector itself has been evolving to include digital media and entertainment, e-sports and gaming, said Cheung, which draw different spheres of interest, and by default, demand.

Lucrative international travel, investment markets are key targets

“All these great industries are attracting a lot of international visitors, international businesses that are looking for Los Angeles as ‘that’ destination for international investment,” said Cheung. 

He noted international delegations also have been coming to LA to learn more about its technological innovations around sustainability, climate change and energy transition. 

LA Tourism is actively working to support continued growth among these higher-spend travelers. It is currently represented in 15 markets around the world, including with seven of its own full-time offices. “We are the only U.S. tourism board to have our own offices and team members overseas,” Burke said. 
To help boost inbound market growth, LA Tourism is continuing to focus on markets where air service has fully recovered to 2019 levels and markets are part of the visa-waiver program.

This is where LAEDC’s hotel partners can tag in, creating experiential packages such as shopping at Beverly Center, going to the Hollywood Bowl or visiting any one of the numerous museums in LA.

“We look at the whole broad scope of demand drivers and where the business can come from and lean into it all. That’s what makes LA so great; just so many options,” said Mills. “We have guests that come back time and time again and they have a different experience every time…I think that's the long-term play for LA. [To] just continue to lean into all those things that we have…and overcome whatever obstacles get in our way.”

Next steps create new opportunities

Cheung indicated there are “a lot of great opportunities” still within the Los Angeles region for hotel developers. “The opportunity zone is one of them and there are other tax credits.” He noted the city has been working very closely with developers to ensure they're able to expedite some of the permit process and facilitate the developments.

“With the opportunity zones specifically…developers could work very closely with economic development corporations like ourselves as well as the city government to make sure they're able to maximize those tax incentives that are available,” said Cheung. “With all the demand drivers emerging throughout this area, there is ample opportunity to expand our inventory and help hoteliers optimize ROI.”

Stefani C. O’Connor is a journalist based in New York City.

The views and opinions expressed in this content do not necessarily reflect the opinions of Hotel Investment Today by Northstar or Northstar Travel Group and its affiliated companies.