HCHM - Asset Management during a Market Decline
Marriott Los Angeles Airport (LAX)
Los Angeles, California
1,004 rooms


Services Provided
  • Acting as owner's representative providing asset advisory services

  • Develop annual operating and capital budgets as well as the annual strategic plan

  • Monitor booking pace and analyze rates by segment to ascertain impacts of adjusting rates

  • Continue to oversee an estimated $12 million renovation to food & beverage facilities, façade, guest rooms, etc. without having a material impact on performance

  • Evaluate space planning for the Hotel. Analyzing Highest and Best Use (HABU) of parking garage and redesigned porte-cochere to accommodate additional meeting and banquet facilities



Key Results
  • Monitored cost controls as demand in the LAX Airport area started to decline. Cost containment is unparalleled. With a decline of nearly $7.4 million in revenue, NOI was only impacted by $900,000 (2001).

  • LAX Marriott maintains the highest ADR in LAX Airport area and achieves the highest RevPar. For the 12 months ended June 2002, the RevPar index was 128%.


Commentary

A landmark in the market since 1973, a $12 million renovation was recently completed at the LAX Marriott, which included refurbishment of the guestrooms and public spaces. All accommodations now feature the "Marriott Bed" and "The Room That Works", a guestroom designed for the business traveler. The 1,004-room property is located just a ¼ mile from LAX Airport, the world's 5th and nation's 4th busiest, and 15 miles from downtown LA and 17 miles from Hollywood, providing a convenient location for both business and leisure travelers.
The hotel boasts more than 50,000 square feet of meeting space, including the largest ballroom in the Airport market, featuring regal décor and state-of-the art sound systems. The Fitness Center was recently expanded, and the hotel's four wings frame a large recreation area that includes a resort pool area unmatched in the market. Under CHM's asset management, the Hotel is successfully established as the premiere property serving the airport market, leading its competition in rate performance.
Even in a soft economy, CHM has been successful in monitoring performance and minimizing NOI impact. At the LAX Marriott, the Hotel continues to be a market leader in the face of its competition reducing rates to positively impact demand. Knowledgeable that this strategy does not often work, we carefully evaluated impact, tested rates and monitored the market to ultimately conclude that deep discounts would not move the occupancy needle sufficiently to offset losses in rate. Furthermore, CHM worked closely with management in developing and evaluating a variety of standard and unique cost containment initiatives to offset the continuing revenue declines. We also moved ahead with the renovation and upgrading, as well as assessing space planning to be able to attract new markets while offering a more attractive and exciting product.