Hungry And Ready

May 18, 2007
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GRAND RAPIDS — The official start of the summer tourism season gets under way this week, and local hotel operators are hoping that higher gasoline prices and a lot of road construction across the state won’t keep tourists home this summer.

That sentiment likely runs deeper for those operating hotels in the suburban market, as they feel they can use some new business.

Brad Arnold, general manager of the Crowne Plaza Grand Rapids, said hotels have had a pretty good revenue year so far, but only because room rates have gone up and not because more guests have checked in.

Arnold said the latest occupancy report from Smith’s Travel Research shows that bookings for the first quarter of this year fell from the same period in 2006.

“By almost double digits,” he said.

“So we’re seeing rate growth, but we’re probably not going to see occupancy growth unless something happens dramatically with the Medical Mile and some of those facilities opening up and getting some new business through those sources.”

While occupancy rates have been down since the last quarter of 2001, after the terrorist attacks did serious damage to the nation’s hospitality industry, more beds have come into the market and more are on the way.

For instance, the JW Marriott will add 340 new rooms to the downtown market, and offers promise for expanding the convention industry here.

In the suburban market, which doesn’t benefit much from the city’s convention trade, the Country Inn & Suites Grand Rapids East is slated to open Thursday at East Beltline and I-96 with 154 rooms. Plans are in the works for a 180-room Drury Inn and Suites in Cascade and for a soon-to-be announced hotel in Wyoming on the Metro Health Village property.

Opening is one thing, but filling rooms is another.

“We’re competing for the same business. There really isn’t any new business coming into the city of Grand Rapids, so that is where it gets very competitive,” said Arnold, who has been with the hotel the past five years.

The Crowne Plaza has been booking guests for 27 years at 5700 28th St. SE and has earned an almost resort-like reputation. The hotel has 320 rooms with a golf course nearby, an indoor-outdoor pool, a fine restaurant and a fitness center — amenities that are considered to be the mark of a successful resort.

Sunstone Hotel Investors Inc. bought the Crowne Plaza a few years back and renovated the property in 2004 to the tune of $1 million. But the firm is now looking for a buyer.

“Our hotel is for sale, but there is a very small likelihood that it will sell. In fact, there is no current interested buyer at this point,” said Arnold.

The main sticking point holding up a sale is that a would-be buyer would also have to make improvements to the hotel — nothing unusual in a highly competitive lodging market but a hindrance in one with only a fair occupancy rate.

“That (improvement) plan is preventing a mutually agreed-upon sale at this point for many interested parties. So at this point, even though we are officially listed through a broker as being for sale, the likelihood that we will sell is less than 5 percent, and we’re looking at refinancing packages to continue to run it as normal,” he said.

Suburban hotel operators are looking for help from two groups to draw new business to their rooms. The first is the new West Michigan Sports Commission, which is being organized to bring more sporting events here and more guests primarily to the hotels in the suburbs.

“Sports teams play a big role in our weekend business strategy. The business traveler treats us well Monday through Friday, but we’re always looking for something to fill those rooms, because otherwise they sit empty on weekends. Sports teams are a great source for that, and the sports commission will be a big plus for existing suburban hotels,” said Arnold.

The second is the Convention and Visitors Bureau. The CVB is putting together a new marketing initiative to raise the room-night counts at suburban hotels. But to get that going, the bureau needs additional funds. It’s hoping to get that money from a bill sponsored by State Rep. Michael Sak, which would allow the CVB to bump up the tax it collects from hotels by a percent and get an estimated $1 million a year from the increase.

The House passed it. The Senate hasn’t squawked about it. And the governor said she would sign it. There still is a catch, though.

“It has to be approved by members of the (Kent County) lodging association before the CVB can collect it,” said Sak, a Grand Rapids Democrat.

Ed Wilson, president of the lodging association, told the Business Journal that the tax has been discussed at several meetings, and individual members have talked among themselves about it. He also said the association hasn’t taken a position on the tax and added that downtown hotel operators are more likely to support the tax than suburban ones because of the benefits they get from conventions.

“I’ve talked to a number of hotels that are very much in favor of it, and some of the hotels that are not,” said Wilson, general manager of the Country Inn and Suites opening this week.

“For this to pass, the CVB needs support from more than just the downtown hotels,” he added.

The CVB can use the money, because starting next year the share of the lodging excise tax the bureau gets from Kent County could drop to $350,000. The CVB is supposed to receive $915,000 this year from the county, which is almost a third of its $3 million budget. But with the agreement the bureau has with the county ending this year, and with the lodging-tax fund spending more than it takes in, there is a good chance the CVB will be getting less from the county starting next year.

“Between now and Dec. 31 we will be working with the CVB to see how much we can contribute,” said County Administrator and Controller Daryl Delabbio last week.

Arnold said the marketing plan the bureau has designed for the suburban hotels has been well received. He called it an important sub-component of an enhanced plan the CVB has put together for the local industry.

“It’s a very well-thought-out plan, and they incorporated input from a lot of us that are involved with them. It’s a great plan and a lot of its success hinges on additional funding they can gain,” said Arnold.

That is good news for suburban operators who have quietly felt for years that the CVB and Convention and Arena Authority have focused too much on the downtown hotels. They say that directing more business to their hotels is good for the overall economy.

“I don’t think people understand this as much as they do other things like manufacturing. But the influx of visitors that not only have a lodging spend, but also a gas, shopping and food spend, is a big ticket — a big boost,” said Arnold.

“And that is not necessarily new demand. It’s just taking demand that exists and telling them that Grand Rapids is hungry and ready for them.”    

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