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Market Report

California Hospitality Investment Forecast

2022 Outlook

Southern California Metros Spearhead State's Larger-Scale Rehabilitation

Restoration of demand drivers generates optimism. Home to 10 percent of the nation’s hotel inventory, the state’s hospitality recovery has been a tale of two regions, with Southern California leading the charge. Supported by increases in second half tourism, Los Angeles and San Diego counties recorded occupancy rates of 64 percent and 62 percent, respectively, during 2021, with Orange County noting the largest annual improvement in hotel demand across California markets. In contrast, the Bay Area has undergone a more protracted recovery, hindered by some of the strictest vaccination requirements nationally and subdued business travel. Last year, San Francisco recorded sub-50 percent occupancy, with San Jose logging a slightly higher mark. Nevertheless, reasons for near-term optimism are emerging, as major tech firms, including Microsoft, announce plans to return employees to offices in the coming months. These decisions, the statewide return of large conventions and an expected rise in domestic and international travel will support the largest occupancy gain across U.S. hotel regions in 2022.
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