Resilient Hotel Performance Amid Crisis

• The 2025 California wildfires led to a surge in hotel demand, particularly in luxury hotels, during the peak evacuation days with minimal impact on overall hotel performance.
• The aftermath of the wildfires is expected to maintain elevated hotel demand due to the significant number of displaced individuals and ongoing rebuilding efforts.

During the devastating California wildfires in January 2025, market demand for hotels surged during peak evacuation days. Occupancy during these days increased by 13.9 percentage points year over year. On the other hand, the weekend saw a slight dip in occupancy by 5 percentage points, largely influenced by the decrease on the preceding Sunday and Monday.

The average daily rate (ADR) between Tuesday and Thursday increased by 6.4%, primarily due to luxury hotels, which saw a 22.7% rise. In the absence of luxury hotels, occupancy growth remained robust, with a more modest rise in ADR.

The same trend was observed in the greater Los Angeles area, including California Central Coast, Inland Empire, Los Angeles, and Orange County. During the peak evacuation days, occupancy was up by 10 percentage points, led by Los Angeles, California Central Coast, and Inland Empire.

Submarkets including Pasadena/Glendale/Burbank, the area affected by the Eaton fire, reported the highest occupancy during these days. Other areas, such as Los Angeles East, South Bay, Long Beach, Santa Monica/Marina Del Rey, and Oxnard/Ventura, also saw increased occupancy.

However, by the weekend, most regions saw occupancy decreases from a year ago, with only Oxnard/Ventura, Long Beach, and Newport Beach/Dana Point showing occupancy increases consistent with displacement demand.

While demand/occupancy dropped over the weekend, it is expected to rise in the coming months due to the large number of homes destroyed and the ongoing recovery and rebuilding efforts.

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