Rooms With A Better View

September 8, 2006
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GRAND RAPIDS — Nearly five years after the Sept. 11 terrorist attacks that brought travel to a standstill across the nation, the local lodging industry is finally beginning to see some gains in room occupancy and rates.

Smith Travel Research, which collects monthly data for the entire U.S. industry, reported that hotels and motels in Kent County had an occupancy rate of 65.4 percent in June. Steve Wilson, president of the Convention and Visitors Bureau, said that figure was the highest monthly occupancy rating in the last five years.

Wilson also said the year-to-date occupancy rate stood at 57.3 percent countywide, up from the 2005 figure of 55.6 percent.

“We’ve grown two points of occupancy so far this year, and typically the second half of the year is our strongest half. So we feel we can push the number up to around 58 percent, and if you go back to 2004, we were in the 54 percent range,” said Wilson.

Prior to the attacks, the rate was 65.7 percent for all of 2000. But for the years following that day, occupancy dived and then bottomed out at 54.5 percent in 2004.

Wilson said the uplifting June rate was due to a busy month at DeVos Place, the city’s convention center, and because the month is typically a good one for local properties. He said quite a few youth and adult sporting events were held here then, and lodging operators worked out their own booking deals.

Advocates of a countywide sports commission have said lodging operators would be the real winners if one is created and can draw more events here. Kent County Chairman Roger Morgan has put together a task force to determine the financial needs of such a commission; its report is due any day now.

“June is handling itself, and we need to see what we can do to get more sporting events in November and February,” said Wilson.

Occupancy, though, hasn’t grown in a vacuum. The average room rate has also gone up, by 7 percent this year compared to 2005.

“That means as our business has grown, our hotels finally have been able to begin to increase their rates,” he said.

Wilson said rates haven’t risen the past few years because occupancy has been soft — not just in Kent County, either, but throughout Michigan, which has had one of the softest rates nationwide for years. He was quick to add that local operators haven’t dropped room rates; they just haven’t been able to match the hikes their out-of-state counterparts have enjoyed in cities where occupancy has risen.

The average countywide room rate this year is $74, according to the Smith report. But that number may be a bit deceiving. Smith gathers these rates from chains such as Holiday Inn, but doesn’t include rates at independents such as the Amway Grand Plaza Hotel.

“They are not consistently in these figures. Because they are typically the price leader, they haven’t been in there, so likely our actual countywide rate is higher than that,” said Wilson.

The actual average rate will go up when the JW Marriott, the expected new price leader, opens in the fall of 2007. And the 24-story luxury downtown hotel being built by Alticor Inc. could lure some new business to the city.

“The JW will certainly fill in the high-end niche for the corporate traveler. We expect that the JW Marriott will attract corporate business out of Chicago and other major metropolitan areas across the country, for instance, that we’re currently not getting,” said Wilson.

And if there is strong demand for a high-priced JW Marriott, room rates could go up at every hotel in the county.

“By having a new price leader, you could get a coattail effect.”

According to the 2005 Industry Profile by the American Hotel and Lodging Association, the average national occupancy rate in 2004 was 61.3 percent, and the average room rate was $86.24. Those are the numbers Wilson and the CVB want the local industry to reach in the years to come.

“Our ultimate goal is to get our annual occupancy figure up into the low 60s. In many other states, their lodging industry came back a couple of years ago. They’ve been driving occupancy and rate, and building new hotels much more rapidly than Michigan has,” he said.

“Probably our biggest reason for that is our economic challenges with what is going on with manufacturing in Michigan. So we have a ways to go. I would say that all along this year, we’ve led the state in occupancy.”    

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