Oct. 16, 2004 - KANSAS CITY, Mo. -- Hotel occupancy in Kansas City is running ahead of the past two dismal years and a full point ahead of at least one expert's recovery projection.

"We're getting to the point where hotel operators are getting comfortable again and seeing some average rate growth," said lodging industry consultant Jeff Marvel, president of Kansas City-based Marvel & Associates.

Through August, Marvel has pegged 2004's average occupancy rate at 59 percent for the metropolitan area's nearly 30,000 rooms.

Following Sept. 11, 2001, the local market hit historic lows of 58 percent in 2002 and 56 percent last year.

Amid signs of the emerging recovery, Marvel earlier this year forecast the 2004 rate at 58 percent and now thinks 60 percent might be within reach.

"It's all coming together at the same time," Marvel said of positive upticks in travel indicators.

The good news for Kansas City lodging operators and investors is 3.7 percent average monthly growth in occupancy over the past 12 months, which is finally permitting some upward movement in room prices.

Marvel calculates the current average room price in the area at $72.52, up 4 percent over last year and its highest since at least 1998. Meanwhile, the industry's standard measure of revenue per available room is up 8.4 percent for the year to $42.79.

Marvel said renewed confidence in the market also was pushing new projects into the financing and construction pipeline -- just ahead of expected interest rate increases.

"Everyone is scrambling now to get deals done," said Marvel.

Until now the situation was not unlike the early '90s, he said, when investors and lenders were on the sidelines during early recovery years after the recession of the late '80s.

"They sat while demand was burgeoning," said Marvel, losing precious lead time needed to build, open and ride the occupancy wave.

This time Marvel said new hotel projects already were starting to sprout around the Little Blue Parkway retail area in Independence, Village West in Wyandotte County and at the KCI Expo Center near Kansas City International Airport. Other projects are beginning to move in the Country Club Plaza area, he said, and two area casinos have announced hotel additions.

Still other developers are looking at boutique hospitality options in the Crossroads District downtown, said Marvel.

"What's happening downtown changes the whole outlook" for the area's lodging and convention industry, said Marvel of rapidly evolving blueprints in the city's downtown core for a nightlife entertainment district, a new sports arena and a performing arts center.

All the positive momentum is loosening up loan money for lodging investments. "For a while there bankers thought 'hotel' was a four-letter word," said Marvel.

Lodging trends are stronger nationally but weaker statewide.

The Bloomberg News Service recently cited a Smith Travel Research report that showed the national occupancy rate up 5.5 percent to 68.8 percent for the week of Oct. 9. Revenues were running 12.2 percent ahead of the same week in 2003 at $54.57 per room, while the average daily room rate nationally was up 6.5 percent to $89.04, it said.

The Missouri Division of Travel recently cited other Smith Travel research that showed lodging occupancy statewide was up 1.1 percent this year through August while room prices were up 2.5 percent and overall lodging revenue was up 3.8 percent.

Likewise, the hotel re-sale market is starting to boom again.

Kansas City-based Hotel Brokers International, a national market leader in lodging real estate sales, said company-brokered transactions through the third quarter had surpassed 2003's total, with 79 transactions valued at $204.6 million.

"This increase is indicative of this market in general as buyers seek out properties to take part in the improving economy and lodging sector," said president Ron McCord.

He said 2004 sales are scattered around the country with no particular geographic hotspots.

The company, with 30 affiliate offices, markets mostly limited-service franchise-style lodging properties, McCord said.

-----To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com.

(c) 2004, The Kansas City Star, Mo. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail [email protected].