LOS ANGELES — Terranea, a Tuscan-themed luxury resort on the bluffs of Rancho Palos Verdes, couldn’t have opened at a worse time.
The sprawling seaside resort had 582 rooms to rent, a fancy spa, eight restaurants and bars, plus one of the largest ballrooms in the region — and, at its debut two years ago, faced the coldest hospitality market in decades.
The owners hired fewer employees than they had planned, launched generous discount promotions and prepared for the worst.
In 2009, the hotel industry was in the roughest shape since the Great Depression of the 1930s. Business and leisure travelers drastically cut back on hotel stays, and many owners including Terranea’s faced the threat of foreclosure.
Hundreds of hotels did go into financial default, but the tide turned this year as travelers ventured forth again, industry analysts said. Terranea alone expects to have more than 740,000 paying hotel and restaurant guests this year, a 22 percent increase over 2010.
“There is a huge difference” at the resort these days, said Robert Lowe Jr., co-president of Lowe Enterprises, developer and co-owner of Terranea. “When we opened in the teeth of the recession, we had 600 associates. Now we have 900.”
The hotel industry bottomed out earlier this year and began to improve in March, hoteliers said, and it looks like the recovery will continue through the vacation season.
“This summer was the acid test,” said Laurence Geller, chief executive of Strategic Hotels & Resorts, which owns some of the country’s best-known luxury inns, including the Hotel del Coronado in San Diego County.
“I didn’t know whether summer would bring a consumer pullback and drop in leisure or group bookings,” Geller said. “Neither has happened.”
Revenue per available hotel room, a standard industry measure, has shown consistent improvement for the past 18 months, according to new data from TravelClick North American Hospitality Review on hotel bookings from June 30 through June 30, 2012.
Recent turmoil on Wall Street hasn’t derailed the industry’s recovery, industry observers said.
“The soft patch in the economy hasn’t affected the hotel yet,” Lowe said of Terranea. “July and August appear to be very strong, and we are cautiously optimistic it’s going to continue.”
The nascent financial recovery for hotel owners has been more a result of filling rooms than raising room prices, though, analysts said.
Though hotels haven’t notched up their posted rates substantially, they have cut down on promotional discounts common in the lean years.
Hoteliers also are reducing the number of rooms they sell at discounts to price-busting travel websites, such as Expedia.com, Geller said.
Hotel operators are relieved at the revival of group business, which plummeted in 2009 through what became known as “the AIG effect.”
Insurance company American International Group took a public drubbing after spending $443,000 to treat top employees at the St. Regis Monarch Beach resort in Dana Point just days after accepting an $85-billion federal bailout. Other companies quickly canceled group outings to save money and avoid looking out of touch during a time of hardship for many.
Group business at Terranea is up 32 percent from the same period last year, officials said, and wedding revenue has increased almost as much. Food, beverage and spa revenue is up 63 percent.
