Analysis: 2025 California wildfire impact on hotel performance

The devastating wildfires in Los Angeles appear to have had limited impacted on hotel performance as of the week ending 11 January 2025. Market demand surged Tuesday through Thursday (7-9 January), which were peak evacuation days, but dissipated over the weekend (Friday & Saturday). 

Occupancy over the three weekdays increased 13.9 percentage points (ppts) year over year. Weekend occupancy declined 5ppts, which was slightly larger than the decrease on Sunday and Monday (-3.5ppts).

Between Tuesday and Thursday, average daily rate (ADR) grew 6.4%. It is important to note that the ADR gain was driven by Luxury hotels, which were up 22.7% over those three days. Excluding Luxury hotels, occupancy growth was still strong (+14.2ppts), but the ADR increase was far more modest (+2.4%) and in line with displacement situations. We believe the growth in Luxury ADR was due to room mix, with higher priced suites being sold in an off week, making for a large percentage gain. 

A similar trend was seen in the greater Los Angeles area, covering four STR-defined markets: California Central Coast, Inland Empire, Los Angeles, and Orange County. Over the three-day period of 7-9 January, occupancy was up 10ppts, led by Los Angeles, California Central Coast and Inland Empire with occupancy increases of more than 8ppts. Orange Country saw more modest growth of 4.8ppts. 

In absolute values, Tuesday through Thursday occupancy averaged 74.9% in the Los Angeles market and 69% in the greater Los Angeles area. A year ago, those averages were 61% and 59%, respectively.

Among the region’s submarkets, Pasadena/Glendale/Burbank, the area of the Eaton fire, reported the highest occupancy (83%) during the peak evacuation days. Los Angeles North, an area north of Pasadena and east of the Palisades fire, saw occupancy hit 79.2%, which was comparable to the Los Angeles Airport submarket. A year ago, these three markets were running occupancy of 63.7% with Pasadena at 58%.

Other submarkets seeing increased occupancy during the peak evacuation days included Los Angeles East, South Bay, Long Beach, Santa Monica/Marina Del Rey, Oxnard/Ventura, Newport Beach/Dana Point, Riverside/San Bernardino, and Los Angeles Southeast, where occupancy ran above 70%. In total, 11 of 24 submarkets in the greater Los Angeles area saw occupancy above 70% during those days. None of those submarkets were at that level over the comparable days last year. 

When expanding the time series to Tuesday through Saturday, the greater Los Angeles area averaged occupancy gains of just under 5ppts to 68.7%. At the peak (Wednesday), all 24 submarkets reported occupancy growth, but by Saturday, most were seeing occupancy decreases from a year ago with only nine on the upswing. Of those nine, only three were seeing occupancy increases that were consistent with displacement demand: Oxnard/Ventura (+8.6ppts), Long Beach (+11.8ppts), and Newport Beach/Dana Point (+12.3ppts). 

Newport Beach/Dana Point and Long Beach have seen consistent occupancy since the evacuations began with level above 80% from Wednesday on. Palm Springs also saw increased occupancy during the week, but like other markets in the area, its level fell versus a year ago over the weekend, which is likely due to the shift in the MLK Day holiday that is a week later this year. 

While demand/occupancy fell over the weekend, we expect that these measures will likely be elevated in the months ahead due to the large number of homes destroyed. Individuals displaced along with rebuilding/recovery teams are expected to increase demand. Additional analysis will be provided as additional weeks of data are obtained.