A 70 percent town
Officials know there’s more work to be done on the city’s brand recognition.
In 2008, Kent County had hotel occupancy of 48 percent.
That number was well below the national average, and Michigan ranked dead last in the nation, but Doug Small saw an opportunity.
“There’s only one way to go but up, baby,” Small remembers telling his friends in Denver who questioned why he would want to move to Grand Rapids.
Small was leaving his role as senior vice president with the Denver Metro Convention & Visitors Bureau to take over the president and CEO duties at Experience Grand Rapids, then the Kent County Convention and Visitors Bureau.
Last year, Kent County’s hotel occupancy climbed to 69 percent — above the national average of 64.4 percent. Michigan’s hotel occupancy also has improved, but still is well below the national average.
Grand Rapids, and the rest of the county, has come a long way — even since 2011 when Experience Grand Rapids named a goal of 70 percent occupancy. At the time, the occupancy rate was in the 50s and many laughed at that lofty objective, said Rick Winn, president of Amway Hotel Corp. and chair of the Experience Grand Rapids board of directors.
“No one in their deepest heart of hearts thought we could make it, and here we are,” Winn said.
“I believe in setting goals that people might question as attainable, and we’ve proven that if you work hard enough that you can make it.”
With a record October on the books — 11 percent ahead of last year — and going on seven straight years of record occupancy for Kent County, there’s a lot happening when it comes to tourism in Grand Rapids.
Two weeks ago, the Kent County Board of Commissioners agreed to extend the county’s deal with Experience Grand Rapids with a five-year agreement that sends between 17 percent and 18 percent of the Lodging Excise Tax revenue to the bureau. Prior agreements between the county and Experience Grand Rapids were for three years.
“This is the first time we have used dollar benchmarks as a mechanism to reward performance with Experience Grand Rapids,” Kent County Administrator/Controller Daryl Delabbio said regarding the deal.
“I believe this agreement acknowledges the excellent work performed by Experience Grand Rapids, and protects the county through a performance- and incentive-based payment process.”
Even so, Experience Grand Rapids knows its work is far from over. Downtown Grand Rapids will receive a modest influx of hotel rooms in the next 18 months: The 142-room Hampton Inn & Suites in Mid Towne Village on Michigan Street will open next month and a Homewood Suites by Hilton is under construction in the Waters Building, now rebranded as Waters Center.
Winn said with the occupancy rate nearing 70 percent, developers are naturally going to look at adding more hotels to the community. He said the pending hotel projects don’t add a lot of inventory and likely will easily be absorbed into the market.
“It’s a natural spotlight for developers to say, ‘Hey that’s an opportunity,’” Winn said. “If you zero in on the occupancy percentage, that could dip, but revenues will stay the same or grow.”
Small isn’t worried about a dip in the percentage. He said many summer weekends are completely booked, allowing business to leak into nearby counties. He also said the new hotels are select-service hotels and won’t add much inventory for convention business — the main driver for Experience Grand Rapids — but the hotels will be perfect for the growing number of visitors coming to the area for events such as those offered by the West Michigan Sports Commission.
He said many of the same concerns were voiced when the JW Marriott opened in 2007.
“It will allow that leaked business to stay here,” he said. “There will be some pressure on us to keep it growing, but we accept that pressure.”
Currently, hotel room rates are also increasing. The percentage rates that have increased is as large as anything Small has seen, but he loves it because it means more money in the organization’s bank account.
“We were undervalued for years, but it’s just brought us up to the competitive set,” Small said. He said markets with which Grand Rapids competes in the convention trade such as Detroit, Cincinnati, Columbus and Pittsburgh have seen similar rates for years.
“I have two 4-Diamond hotels downtown that were so undervalued they were practically 2-Diamond rates.”
He does worry about the rate climbing too fast before the city’s brand is fully established. He said people still think of Grand Rapids as a sleepy West Michigan town and are surprised to see big buildings downtown. He said there’s several more years of brand building that needs to happen.
“The brand thing is, in many people’s minds, Grand Rapids is not a $200 a night town — it’s a $150 a night town,” Small said. “As good as we’ve gotten, our brand recognition is not where it needs to be.”
To help figure out what needs to be done to ensure Grand Rapids continues forward as a consistent 70 percent occupancy town, Experience Grand Rapids will commission a destination analysis to see if Grand Rapids can maintain its success with the current infrastructure, or if there are things that still are missing.
Small said assuming the board approves the 2016 budget in December, the study will be done in the first half of 2016.
“It could come back and say we’re fine as we are,” Small said. “But we need to know that now. If something comes out of it, it’ll take another few years to gear up to do.”
One thing the study will consider is whether Grand Rapids could support more convention center space, and if so, how many more hotel rooms would be necessary. The study also could point to something completely different, such as a major natatorium for swimming.
“A bigger convention center doesn’t guarantee more business, and that’s part of the analysis,” he said. “That’s what we need to find out. What will allow us to be a 70 percent town or more on an annual basis?
“If you asked me today, without being an expert on infrastructure, I would tell you I’m not confident we can climb much higher with the current status. Maybe the study bears me wrong; my guess is you’ll need a change in infrastructure to draw in more visitors.”
Small said the brand building and drawing in visitors is easier because of the economic momentum West Michigan has coming out of the Great Recession. Likewise, Winn said that resurgence of downtown development has helped increase hotel occupancy.
Winn said even the smaller things the Amway Hotel Corp. does — like the new Wolfgang Puck restaurant, The Kitchen, in the Amway Grand Plaza — helps champion the image of the city.
He added that, with the many residential projects in downtown, more friends and families of those residents will desire to stay downtown during visits.
Winn also pointed to the growing attractions in the city, such as ArtPrize, Frederik Meijer Gardens & Sculpture Park, Grand Rapids Art Museum and Gerald R. Ford Presidential Museum, all of which are helping raise the profile of the city.
“The reviving of downtown, all of those projects that came into play more than 10 years ago — Grand Rapids finally has people nationwide paying attention, and that’s the key. … There are a thousand associations that can book our city, and so many had no idea what Grand Rapids was.
“I think, at this point, we’re seeing people are sitting up and taking notice.”