Vacancies on the rise for city's hotels
Planned closure of Worcester Hotel and Convention Center is sign of city's hospitality struggles
Even with 142 fewer hotel rooms on the market thanks to the planned closure the Worcester Hotel and Convention Center, it's unlikely that stress on the city's hotel operators will let up.
According to a report compiled by Tennessee-based Smith Travel Research, hotels in Worcester were barely more than 60 percent occupied during the first half of the year. Occupancy dipped below 40 percent and hovered around half-full over the winter.
According to STR, the supply of hotel rooms in Worcester hit 34,813 in May. During the same month, demand was for 20,893.
So, no one can complain that it's hard to find a hotel room in Worcester.
On the other hand, no one decides to visit a city based on the availability of hotel rooms.
According to the Cranston, R.I.-based Procaccianti Group, which owns the Worcester Hotel and Convention Center, no potential buyers, let alone guests, showed much interest in the property.
The Procaccianti Group said it would close the hotel for good on July 27 because it "just wasn't performing to the level we expected," said Ralph Izzi, the group's marketing and communications director.
The Procaccianti Group bought the hotel, formerly a Holiday Inn, in 2005. Last year, the group put the property on the market, but "we have not had any potential buyers come forward," Izzi said. He said he didn't know if the property was still for sale, and there is a possibility that the Procaccianti Group could redevelop the property with a different use.
Procaccianti owns and operates 57 hotels in 20 states. Izzi said there were a variety of reasons for closing the Lincoln Street hotel and convention center, but the primary reason was that "the hotel as it is today doesn't fit in with our portfolio, or our strategy, which is to acquire and operate upscale properties."
Izzi said the group was offering the hotel's 35 employees opportunities to transfer to other Procaccianti-owned hotels.
A clear trend
It's clear that the Procaccianti Group's struggles are not unique in the city, according to the STR numbers.
With the exceptions of May and July 2006, occupancy at Worcester hotels has been down since last March. The doldrums hit their depths last winter when occupancy was down between 15 percent and 21 percent from October to February compared to the same period in 2005.
Still, the city's hotels made money last year. Overall revenue for Worcester hotels was $18.7 million in 2005, $21.7 million in 2006, and $9.3 million as of May of this year.
But it appears as if hotels are making less per room. According to STR, revenue per available room has been down as much as 18 percent so far in 2007, a trend that has been at work since last summer.
More choice, more problems
Amid the sporadic occupancy and a collection of hotels that are variously profitable, the 199-room Hilton Garden Inn opened on Major Taylor Boulevard downtown.
Despite the new rooms available downtown, Howard Sobel, general manager of the Crowne Plaza, said the Hilton Garden Inn hasn't had much effect on hotel business.
"Notoriously, hotels in Worcester are not that strong," Sobel said. Nevertheless, "this July, we're probably having our best July in years, and that's with a new hotel" in the neighborhood.
Sobel credited the recent New England Summer Nationals classic car show and other events for the pumped up July numbers.
Apart from that and other special events, though, Sobel and other city hotel managers said having a new hotel in town requires existing hotels to scramble to fill rooms left vacant when visitors choose the new hotel.
"It used to be, if you were going to an event at the DCU Center, you stayed at the Crowne," said Mark Waxler, vice president and general manager of the Beechwood Hotel off Plantation Street.
But the Hilton is closer to the DCU Center, and new hotels are attractive to visitors. Also, people and organizations that book hotel rooms frequently, or in large numbers, are loyal to certain chains. If an event planner has been satisfied with Hilton hotels around the country, he'll part ways with other hotels in cities where new Hiltons open.
On one hand, Sobel said the Crowne doesn't worry too much about the Hilton. "That hotel isn't exactly the same kind of hotel," he said. "We're a full-service hotel." On the other hand, "any new hotel in the city takes away business, not only from us, but from anybody," he said.
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