Tuesday, January 29, 2002

Hotels among emptiest in U.S.

Only half of city's rooms full in 2001, survey finds

By Ken Alltucker
The Cincinnati Enquirer

        Greater Cincinnati hotels in 2001 had the lowest occupancy rate of any large metropolitan region in the United States, a new report shows.

        Of the nation's 82 largest markets, none posted a lower hotel occupancy rate last year than Greater Cincinnati's 50.1 percent, according to Smith Travel Research, a Tennessee-based firm that tracks the hospitality industry.

        Hotel occupancy nationwide suffered because of the recession and Sept. 11 terrorist attacks. Cincinnati-area hotels carried the added burden of a lengthy Comair pilots strike, April's riots and a call to boycott downtown.

        Those events conspired to depress Greater Cincinnati's hotel occupancy to the low est level in the 15 years that Smith Travel Research has tracked the market. Greater Cincinnati's occupancy rate in 2000 was 55.8 percent.

        “We're looking at a very, very unusual year,” Greg Kaylor, general manager of the Crowne Plaza Hotel in downtown Cincinnati, said Monday. “It puts you in a position where everybody is ultra-competitive in terms of rates.”

        Downtown hotels struggled even more as occupancy rates dipped to 48.5 percent and average room rates declined 3.9 percent.

        Downtown hotel managers say Cincinnati's poor standing points to the need to expand and renovate the Albert B. Sabin Cincinnati Convention Center.

        Mayor Charlie Luken and Hamilton County Commissioner Todd Portune unveiled a financing plan last week for the $198 million convention center expansion, but the proposal already has detractors.

        Sharonville Mayor Virgil Lovitt will conduct a news conference today to explain how the proposed tax would harm suburban hotels.

        The poor occupancy rates also have hampered marketing efforts of area convention bureaus, which depend on hotel taxes to fund operations.

        Chuck Curran, interim president of the Greater Cincinnati Convention and Visitors Bureau, expects to unveil a new regional marketing plan that aims to deliver a cheaper but more effective message.

        “We're looking at ways we can leverage efforts,” Mr. Curran said. “We will bring forward one strategic message.”

        Hotel managers warn the difficult conditions could force some properties to cease operations.

        “Not everyone is going to survive,” said Dan Fay, president of Covington-based Commonwealth Hotels. “That's a pretty bad number. Some people are going to drop off.”

        Mr. Fay said hotels generally begin to struggle when occupancy dips below 62 percent.

        According to Smith Travel, occupancy and room rates in every part of Greater Cincinnati declined from 2000.

        Occupancy at downtown hotels dropped to 48.5 percent from 54.8 percent in 2000.

        Northern Kentucky hotels tumbled the most, falling to 51.1 percent from 60 percent in 2000.

        Warren County and Cincinnati's northern suburbs also had lower occupancy and room rates.

        The Cincinnati convention bu reau and the Greater Cincinnati Chamber of Commerce have appealed to the largest area corporations to hold conventions in Cincinnati. The bureau also launched a Web site offering discounts to visitors of downtown and Northern Kentucky establishments.

        Because people are traveling by air less often since Sept. 11, Mr. Curran said, the bureau plans to target markets within one day's drive of Cincinnati.

        Area hotels also should get a boost from an increase in convention bookings and special events such as the Conference USA men's basketball tournament and Billy Graham visit scheduled this year, Mr. Curran said.

        Michel Sheer, president of the Greater Cincinnati Hotel & Motel Association, said the hotel industry's slump was triggered more than 18 months ago when free-spending dot-coms began to falter.

        Smith Travel Report shows technology-driven economies such as San Francisco; San Jose, Calif.; and Austin, Texas, had sharp drops in hotel occupancy in 2001. However, their overall occupancy rates remain higher than Cincinnati's.

        Following Cincinnati, the next-lowest hotel occupancy rates include Greenville, S.C., 51.9 percent; Charlotte, N.C., 52.2 percent; and Dayton, 54.2 percent.

        New York's City's 73.6 percent clip was the highest hotel occupancy rate.


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