Marriott’s Javier Cano talks about why long-term rewards outweigh short-term bumps for hotel investors in a city where “there are always opportunities.”
LOS ANGELES ‒ Marriott’s Area General Manager for metropolitan Los Angeles, Javier Cano, has out-managed the city’s best and worst investment climates for more than 45 years. His takeaway for hotel investors: “There are always opportunities in LA.”
As the operations leader who has had to make investors’ numbers work, Cano is not talking in cliches. He’s frank in saying that, while there may be good opportunities for additional supply, unlocking them won’t always be easy.
Javier Cano, Marriott area general manager, metropolitan Los Angeles
Los Angeles is fortunate to be seeing $3 billion worth of investment in 2,000 new rooms opening this year and a 16-property pipeline at a time when other cities are experiencing slowdowns and stalls. This reverses the downward trend of 2023-24, but the challenges posed by high interest rate, construction and operating costs are making new-build a tough choice to rationalize.
Citywide conversion opportunities
“This market needs time to recover before we start to see significant gains in new hotel construction. Some fundamentals have to change to make this environment better for development,” said Cano, who also serves as vice chair of the Hotel Association of Los Angeles.
The upside for investors is the variety of ways to play this expansive geographic market. Obviously, the emphasis will be on conversions. An uptick in defaults may widen investors’ search terms. But hotel investors will have to brace for more competition from office investors looking to ride the wave of in-office or hybrid work policies.
Fortunately, said Cano, the sheer size of Los Angeles and the increased accessibility to various neighborhoods driven by the expansion of the city’s Metro system give hotel investors more scope to shop.
“Extension of public transit throughout the city means investors have more options to find the right asset with the right turnaround profile at the right price in the right market. Not every investor will recognize whether a particular asset should come into play. So, there’s also a value-add for investors who see the possibilities.”
There is also the ROI-building potential of being in world spotlight as the host city for global sports events from the 2026 FIFA World Cup™ to the 2028 Olympic and Paralympic Games. While the world may be looking at the spectacle and athletic excellence of these events, Cano has his eye on how to leverage them to build hotel performance long term.
“This will be the third time Los Angeles has hosted the Olympic Games. We’ve learned how to ensure these events don’t have a one-and-done boost for hotel performance,” said Cano.
Building on Paris’ success in showcasing the entire city during the 2024 Summer Olympic Games, the Los Angeles Tourism & Convention Board (LA Tourism), the Los Angeles Sports & Entertainment Commission, LA28 and other organizations are using the platform of world-class events to introduce international travelers to the city’s rich mix of demand generators.
Extension of public transit throughout the city means investors have more options to find the right asset with the right turnaround profile at the right price in the right market.
Javier Cano
“These world-class events focus global attention on Los Angeles. They show what’s on offer citywide, and that can be very, very attractive to international travelers who deliver a higher average spend to our hotels [than their domestic counterparts] but also to people who are planning meetings and events. They see all the attractions of Los Angeles, and they start thinking about the appeal for their groups,” said Cano. “We don’t have an Eiffel Tower or a Statue of Liberty that symbolizes this city. Our neighborhoods, with all the diverse experiences they offer, are the essence of LA.”
New demand drivers
Investors who make their move into this market sooner rather than later will get a share of that marketing push. But, equally important for the long term, they can capitalize on visitor increases fueled by the LAX airport expansion and upgrades, the city’s diversifying business base and a dynamic art, culture and dining scene.
Passage of the proposed Los Angeles Convention Center expansion is a critical piece of the profit puzzle, according to Cano. He knows the importance of that firsthand after four decades of overseeing operations at two of the city’s most recognized conference and meeting venues, The Ritz-Carlton, Los Angeles, and the JW Marriott Los Angeles L.A. LIVE.
“A convention facility that can compete for nationwide conventions not only benefits Downtown LA. With a big citywide, the compression is significant, and it reaches through all parts of the city of Los Angeles,” he said.
Local, regional revenue catalysts
These seminal changes may be essential to enabling Los Angeles’s hotels to fully recover to 2019 levels, but Cano also stressed the importance of cultivating local and regional markets as cost-effective hotel revenue drivers.
“We’re fortunate to have a number of different organizations like LA Tourism, the Los Angeles Tourism Marketing District, the hotel association and others who work not only with local but regional governments to support visitor growth,” said Cano.
For example, LA Tourism began offsetting the tourism impact of the wildfires with fast-track offers that attracted a regional market looking for a weekend getaway or a cultural immersion in the city’s extensive menu of museums. A Dine LA campaign that included a Bank of California donation to the Red Cross for every reservation stimulated F&B business from locals and visitors looking to support victims of the fires. Close collaboration with the sponsors of major conferences and events, including ALIS 2025 and the Grammy awards, kept this key business on the books.
“Hospitality and tourism is one of the largest industries in Southern California, so we do get a lot of attention from key elected officials. They have been great about talking with us about how we continue to enhance different guest experiences. And that’s essential at a time when people book travel because they want to experience new museums, certain culinary scenes or beautiful beaches.”
The rewards of hotel investment in Los Angeles make a strong case for entry into this multi-faceted market. But what about the risks?
Why rewards outweigh risks
“We’ve got some risk right now, and we’ve got some challenges,” he said. “Some of the ordinances [such as the Living Wage ordinance passed in December] that have been put together, while well-intentioned, have had some unintended effects.”
...costs are going to go up in cities across the country. However, the stimulus of all the events and the proven status of Los Angeles as one of the world’s great cities likely will mean your hotel will command higher occupancy and RevPAR over the long term.”
Javier Cano
“It's probably going to take a little bit of a runway to see how we deal with that and see what can be done to make sure they don't become a long-term drag on the industry,” he added. “A number of ordinances have been passed that have increased the operating costs of hoteliers in Los Angeles. Some hoteliers and prospective investors are asking how we going to be able to do business in this market and how do we track revenue to be able to offset some of these cost increases?”
His hope is that there will be a chance to modify some of these measures so the impact on hotels will be tempered. Cano pointed out, “The hotel association is focusing its efforts on education and then seeing what we can do to possibly mitigate some of the unintended consequences that could happen with some of these ordinances that were passed.”
Cano acknowledges what this could mean to risk-averse or capital-strapped investors, but he also cautioned them about the longer-term risks of “thinking in the moment.”
“Hotel investors usually have to think about hold periods that are going to cross a number of cycles. Yes, there may be added pressures on operating costs in Los Angeles today. But costs are going to go up in cities across the country,” he said. “However, the stimulus of all the events and the proven status of Los Angeles as one of the world’s great cities likely will mean your hotel will command higher occupancy and RevPAR over the long term.”
“Everything is cyclical,” Cano added. “It doesn’t matter what the market is. Investors need to consider what the market looks like for the specific property they’re investing in. Value can always be found. Los Angeles’ fundamentals, its cultural diversity, the weather, the beaches, the business base ‒ that’s what has and continues to drive people to come to LA.”
Mary Scoviak is custom and design content director for Hotel Investment Today by Northstar.
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.