Why aren't hotels full for the World Cup — and what does it mean for LA?

The World Cup kicks off tomorrow but you wouldn’t know it from hotel bookings.

“There is quite a lot of hotel availability throughout the region,” said Jackie Filla, CEO of the Hotel Association of Los Angeles. “Visitor rates are not meeting expectations currently.”

Filla said that when major events come to L.A., organizers and hotels estimate demand for rooms, and hotels commit to having enough rooms to meet that demand through a room block agreement.

L.A. hotels made such an agreement with FIFA around eight years ago, Filla told LAist, but a lot of those rooms are now sitting empty.

Where did the demand go? 

In May, the American Hotel and Lodging Association said that up to 70% of L.A. hotels reported bookings below expectations ahead of the World Cup — a trend happening across the board in World Cup host cities.

The report laid out a few possible reasons, including high fuel prices and “broader geopolitical concerns” that make international fans more reluctant to travel to the United States. The report said domestic travelers are forecasted to outpace international travelers.

Filla added that right now, bookings aren’t just lower than expected for the World Cup — they’re behind usual summer numbers too. That might be because mega-events can deter traditional hotel customers from visiting the city.

“There are business conferences and leisure travelers that are not associated with the event that [visiting L.A.] is going to feel unappealing to,” she said.

Not all hotels are feeling the pain, though.

Javier Cano, the Area General Manager for Marriott International in L. A., said that they are “having just about what [they] thought they would” in terms of bookings.

Does this change the promised boost to the economy? 

FIFA has consistently billed the World Cup as an economic boon to host cities.

According to Stafford Nichols, an economist at research and consulting firm Beacon Economics, sports events usually do boost economic activity.

But the spike from the World Cup might not be much bigger than other sports events in L.A.

The World Cup is set to bring in $550 million, he said, while next year’s Super Bowl is expected to generate about $470 million. In contrast, Nichols said the Olympics could generate “many billions.”

Still, the effects of low hotel bookings could reverberate across the economy. Part of the predicted income number comes from “direct spending” on things like hotel rooms, which Nichols said accounts for 40–50% of tourist spending in L.A.

Some of the projection also comes from “spillovers,” like increased income for a hotel’s business partners (for example, their preferred laundromat).

With hotels underbooked, both of these effects might be dampened.

How will hospitality workers be affected? 

Kurt Petersen, a co-president of the union Unite Here Local 11, told LAist that mega-events usually create a surge of employment.

This time around, he said workers are seeing fewer employment opportunities, especially in downtown L.A. hotels.

“The hope was that FIFA would bring work to all our members. That has not come to pass yet,” Petersen told LAist.

He said having fewer shifts during the World Cup means that workers may need to make “tough choices.”

“It’s difficult to live in Los Angeles [...] having less work means making harder choices about how to make your dollar go further,” he said.

What about other lodging options, like Airbnbs? 

Isabelle Goldberg, a communications manager for Airbnb, wrote in a statement to LAist that “the FIFA World Cup is set to be the biggest hosting event in Airbnb’s history.”

As of April, the most popular L.A. rental locations were Central Hollywood, North Hawthorne, and West Hollywood.

Bookings in Inglewood, near SoFi stadium, are also on-pace with expectations, according to James T. Butts, mayor of Inglewood.

Butts said that Inglewood’s “vigorous” short-term rental population is a “benefit accrued to residents from Inglewood becoming a sports destination city.”

But others point to implications of strong short-term rental bookings for the traditional hospitality sector.

Filla said, “when you flood the market with new Airbnbs, who [...] don’t have insurance requirements, regulatory requirements, a staff of people who live in Los Angeles that they need to support, that’s concerning for us.”

She said that hotels are still hoping for a last-minute bookings boost.

“I think folks are waiting to see who’s going to play in some of these matches, and that will dictate potential new bookings.”

Los Angeles is hosting eight tournament games, including a quarter-final match on July 10.