Record attendance drives hotel revenue
Rise in daily room rates, entertainment options attributed to number of hotel rooms booked.
(As seen on WZZM TV 13) Kent County’s hotel revenue saw an increase of 6.8 percent in 2017. The percentage growth has not been as large as in past years, but the record revenue of nearly $211 million can be attributed to several factors.
West Michigan Sports Commission had a 32 percent increase in events. The 76 sporting events, including the State Games of America, brought more than 202,000 athletes and visitors to the area.
Last year saw the opening of the 20 Monroe Live concert venue, which hosted 154 events, 24 of which were sold out, with a total attendance of 180,000 guests.
Frederik Meijer Gardens and Sculpture Park sold out 17 of its 30 concerts in its 2017 Summer Concert Series, and internationally acclaimed artist Ai Weiwei had an exhibit at the venue.
There was record attendance at John Ball Zoo in 2017, with more than 530,000 guests.
The Gerald R. Ford International Airport had another record year, with 2.8 million passengers in 2017.
This helped lead to a 67.2 percent occupancy rate, a slight increase from the 2016 rate of 66.6 percent. The 2017 national and state occupancy rates were 65.9 percent and 61.4 percent, respectively.
The occupancy rate has grown significantly over the past decade. It was 48.6 percent when Doug Small, president and CEO of Experience Grand Rapids, began his tenure in 2009.
To grow occupancy 1 percentage point, Kent County must book an additional 26,000 room nights a year, Small said.
There is a combination of factors that made so much growth happen, according to Small.
He said Grand Rapids has been successful at filling hotels with conventions and business-related customers. As local companies continue to get stronger, there is more business travel into Grand Rapids.
Most of the Experience GR marketing is aimed toward the leisure traveler, he said, and that weekend business is what can make the difference.
There is a lot of focus on pushing the Grand Rapids brand: breweries, coffee shops, restaurants, arts and culture, outdoor activities, live music and affordable prices. Small said there are more than 100 venues in the area that feature live music.
“Those are the things that we’re pushing, and that’s what’s driving that weekend traffic, and thus, that’s what’s driving occupancy up,” he said.
“Conventions don’t show up at your door, and leisure travelers don’t know to come to your city for concerts and beer if you’re not telling them.”
Two years ago, Grand Action commissioned, at Experience GR’s request, a destination asset study to determine whether the current tourism infrastructure could sustain continued growth.
One piece that came from that study is downtown Grand Rapids is “at least one convention-style hotel shy” of what would make the most impact.
“Meaning there’s still capacity in our convention center to support another convention-style hotel” of 300 to 500 rooms and meeting space.
“I and my staff concur with that,” Small said.
At the moment, he said, there is room downtown for one convention at a time. Another convention space would “maximize opportunity.”
There is a request for proposal out now to hire consultants to perform a study regarding whether another convention space is needed and the best way to approach it.
“I don’t know what it’s going to come back and say, but we feel, as a staff, that there is a whole other bucket of business out there that we could approach if we had at least one more convention-style hotel downtown,” he said, such as the JW Marriott or the Grand Amway Plaza.
Small said there have been a lot of rooms opening in the past couple years, but they’ve been in small hotels, which, unless they’re unique, “don’t tend to bring any business opportunity.”
He pointed to the Homewood Suites downtown, which he said is one of his “favorite hotels,” but it’s not bringing new business opportunity, only giving current business another choice.
Grand Rapids has, however, been able to absorb that new supply, as seen in the occupancy rate numbers, he said.
But, getting too many rooms of the “wrong type” is one of the things Small said keeps him “up at night.”
If Grand Rapids got another 400-room hotel, plus the ones on their way — a 130-room AC Hotel at 50 Monroe Ave. NW, 160-room Hyatt Place at 150 Ottawa Ave. NW, the 164-room Canopy hotel as part of the Studio Park project, and the 246-room Embassy Suites at 710 Monroe Ave. NW — Small would say, for now, that’s enough.
The 2016 study also suggested considering the expansion of the current convention center space as an intermediate fix
“We’re not in any hurry to do that because the study did say we still have capacity, and I’d rather look at what we can do with an extra convention hotel first,” he said.
He mentioned his counterpart in Indianapolis, which he said has “grown handsomely,” did a study looking at the need of a new convention center, and it said building an 800-room hotel with a lot of convention space would be most beneficial for that city.
Another piece Small said has caused total revenue rates to increase was an increase in daily room rates. On average, they have grown about $30 from $84.73 per night in 2009.
In the coming year, Small projects an increase in total revenue rates by 3.75 percent.
But, he said 2019 looking like that year that “all bets are off.” With increased supply, he said hotels throughout the country, including in Grand Rapids, may be forced to drop daily rates.