Hotels Ride A Surge | Revenues for 2011 near pre-recession levels, but uncertainty clouds construction market
PHOTO/EDD COTE
Maura Peeler of True North Hotels, which has hotels in Devens and Marlborough, said corporate business travel is up, which has helped boost business over the last two years.
The region's hotel market has largely rebounded since taking a recessionary dip in 2009, data from Smith Travel Research show.
Central Massachusetts hotels tracked by the firm saw revenues start to climb in 2010 and then spike in 2011, nearly to levels last seen in 2008.
True North Hotels, which has two hotels in Devens and one in Marlborough, has certainly experienced that trend, said Maura Peeler, an area manager for True North.
"I think we've seen a decent rebound, certainly in rate," Peeler said. "We've seen companies' business travel resurge a little bit. So we're encouraged."
True North completed construction in November on a Hilton Garden Inn in Devens. Peeler said the company's SpringHill Suites in Devens had been operating with an uncharacteristically high occupancy of more than 75 percent for five straight years.
"Obviously there was demand, and we felt if we didn't (build another hotel), someone else would," she said.
It's one of the only examples of new hotel construction in Central Massachusetts, according to data from Lodging Econometrics, a New Hampshire-based firm that has tracked the U.S. hotel industry for 30 years.
Rebecca Evans, the firm's messaging director, said the hotel construction pipeline remains sluggish across the country, with exceptions in major markets such as New York City and Boston.
"We're seeing a lot of projects halted in early planning," Evans said. "People just aren't getting the financing they need."
That seems to be the problem in Shrewsbury, where a 90-room Holiday Inn Express approved in 2010 has not materialized. The property, located just off Interstate 290 across from the Shrewsbury postal center, remains a dirt lot.
An attorney for Andrew Surabian, the developer of the Shrewsbury site, did not return a call seeking comment.
But Shrewsbury Town Planner Kristen Wilson said the owners have told her they are close to obtaining the financing they need. The property is also permitted for a restaurant, though Wilson said she has not heard of any specific restaurant signing on yet.
"We've been hearing from the attorney and the applicant that they are getting close to closing their financing deal for the project to go forward as hotel and restaurant," Wilson said.
Central Mass. Metrics
Occupancy rates in Central Massachusetts averaged 65.8 percent in 2011, the highest number in years, according to Smith Travel Research (STR).
The closing of the former 243-room Crowne Plaza hotel in Worcester was a boon for other hotels, which saw their occupancy rates swell, STR data show.
Revenue per room, another important industry metric, also climbed beyond 2008 levels last year in the region, averaging $65.70 compared to $51.90 in 2009.
STR tracks 35 Central Massachusetts hotel properties in Worcester, Westborough, Framingham, Natick, Shrewsbury and Marlborough.
The Crowne's closing illustrates a reality of the hotel market: The industry rises and falls with the economy. And there are many factors hoteliers cannot control. Some can help. Many can hurt.
Peeler said government cuts over the past few years hurt True North's meeting space and room revenues in Devens.
"The government budget cuts are certainly an uncontrollable factor for us," she said. "And the economic downturn in our nation really affected the whole industry."
The Current Trend
While no one should expect lots of new hotels to spring up in the immediate future, it doesn't mean existing hotels aren't investing and changing to remain competitive and current, said Evans of Lodging Econometrics.
"Whereas the pipeline is really sluggish, we're starting to see this new trend of product replacement and renovating properties," she said.
A few examples of hotels undergoing changes in the area, according to Lodging Econometrics, include the Super 8 in Leominster, which is being converted to a Best Western; the Quality Inn & Suites in Worcester, which is being converted to a Suburban Extended Stay; and the Courtyard by Marriott in Fitchburg, which is being converted to a Holiday Inn.
In Fitchburg, Skip Drinkard took over in February as general manager of the Courtyard by Marriott. He said the owners and management of the Fitchburg hotel decided the Holiday Inn flag would better suit the "family friendly" market the hotel, which includes a CoCoKey Water Resort, is pursuing.
"We have no problem with Marriott and we think they're great operators," Drinkard said. "The primary motivation is to make the flag fit with the property a little bit better."
The new signs will go up in July. In the meantime, the hotel is undergoing nearly $750,000 in renovations to its common areas and exterior, Drinkard said. He said the new hotel would offer more services than it does now, including a full-service restaurant and room service.
Drinkard, who has overseen other rebrands in the United States, said he believes the industry is going through a fine-tuning phase right now. And with more hotel brands in the market, hotel owners are rebranding more often.
"I think you find people reflagging because the flag they've got just doesn't exactly fit into the market they're after," he said. "And I think that's what happened to us."
Hotel Hopes
The Crowne's closing may have helped its competitors, but it has hurt the city of Worcester in some ways, said Bob Murdock, director of sales for Destination Worcester, which works to bring events to the city.
Worcester sometimes doesn't have the right combination of enough rooms and meeting space to accommodate certain groups, he said.
The city was able to attract a synchronized skating event to the DCU Center in March that needed between 1,200 and 1,500 rooms. Worcester has just over 600, so event-goers had to stay outside the city in communities like Auburn and Marlborough.
Of course, that's good for hoteliers in those communities. But Murdock, who noted that some city hotel managers disagree that another hotel is needed, thinks the city's economy would benefit more from keeping visitors within its borders so they could patronize restaurants and businesses.
"You work with what you have," Murdock said. "From my position, I'd love to see another full-service hotel with lots of rooms."
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