|By Daniel Barbarisi, The Providence
Journal, R.I.McClatchy-Tribune Regional News
May 13, 2007 - For four days in the summer of 2003, more than 3,500 cops took over Providence, dining, meeting, touring, and partying as delegates to the national Fraternal Order of Police Convention.
But fewer than half of them spent their nights in Providence. There weren't enough hotels to accommodate the largest convention the city ever hosted, and attendees were forced to stay as far away as Mystic, Conn. It was the high watermark for conventions in Providence, but it also showcased the city's lack of accommodations. Providence hasn't hosted a convention near that size since.
The experience shone a spotlight on what local convention and hotel interests had been saying for years: Providence doesn't have enough hotels to attract and host big -- and lucrative -- conventions.
"Once the destination became established, and we began to play a little bit as a convention destination, things leveled off," said James McCarvill, executive director of the Rhode Island Convention Center Authority. Without more hotels, he said, the business has gone nowhere.
"Flat. We've been flat for probably five years or longer," he said.
Now the convention industry is getting what it asked for.
The Renaissance Providence Hotel -- better known as the Masonic Temple -- will open on Thursday, bringing 274 high-class hotel rooms to the downtown area. In August, the Westin Providence Hotel will open the hotel section of its 32-story addition, bringing 200 more rooms onto the market. Together, they will increase Providence's hotel stock by nearly a quarter, to 2,100 rooms.
The Holiday Inn on Atwells Avenue was also recently renovated into a 274-room Hilton at a cost of $40 million. The Hilton chain is more attractive to convention organizers than Holiday Inn.
Three other hotel projects are in various stages of being planned and a fourth has been proposed.
Will the expansion be the magic bullet the local convention industry has been waiting for?
Early returns are good: In total, the city averaged 12 midsize or larger conventions over the last three years. It has booked 13 for next year and 12 for 2009 already, with more than 20 conventions still considering booking in the city.
Over at the Renaissance Providence, Tom Riel marches around amid the din of final construction, as he gets the 81-year-old building ready for its opening.
The temple, which was never occupied after construction halted just before the stock market crash of 1929, is now being counted on to help draw the city's convention industry out of its doldrums.
Riel, director of sales and marketing, is an optimist by trade, but his excitement peaks when talking about the impact the new hotels will have on the convention market: more and bigger conventions, and possibly lower hotel prices citywide as a result of more competition.
Riel sees his new hotel attracting the business traveler during the week, hosting small executive meetings, and entering the convention market during citywide conventions.
"There is no Ritz Carlton or Four Seasons here in Rhode Island, and we're positioning ourselves there," he said.
But the Renaissance doesn't necessarily view itself as a convention hotel. It's happy to cede that territory to the Westin, which combines upscale space with a direct physical connection to the Rhode Island Convention Center -- not to mention a convention-friendly total of 564 rooms.
But the Renaissance is rooting for the Westin to fill with convention traffic -- and drive leisure and business travelers to the Renaissance.
"The Westin's expansion is a great thing for us. We'd love, quite frankly, to see the convention center fill, and the convention center hotels fill," Riel said.
"If there's a citywide convention, and the Westin has to commit 400 rooms to that, then that squeezes that customer out to us," Riel said.
The 200-room expansion of the Westin should make the hotel the third largest city hotel in New England at 564 rooms, said Sam Guedouar, general manager of the Westin. And with that kind of size, they're starting to chase mid-size conventions that are seeking a single hotel, and have until now been forced to choose Boston or one of the Connecticut casinos.
"We're going after Boston business now," he said.
The demand for the rooms is there, Guedouar said. The new tower is booked for events in August and September.
"As soon as they come online, they're taken right away. There is demand," he said.
That demand has kept hotel prices high, however, and if they stay that way, they may prevent Providence from ever truly capitalizing on the convention market.
When the city started attracting larger conventions 5 to 10 years ago, supply and demand combined with the buzz of an attractive market to push the rates up, higher than many convention planners wanted to pay for a second tier city. In 2005, you could pay more than $140 for an average room in Providence, while a similar room in Hartford would cost less than $100.
Riel thinks the new hotels will drive down prices.
Providence, he said, has long had a dearth of hotels. Fewer hotels mean higher occupancy rates and higher prices, which he said has contributed to the stagnant convention market.
"The rates went up up up, and then the event planners went away," Riel said.
But in Providence's recent history, more hotels have not meant lower prices.
In 2000, Providence had fewer hotels, and an occupancy rate of 76.5 percent, well above the national average of 63 percent. Over the last seven years, Providence has continued to welcome new hotels including the Courtyard by Marriott, the Hotel Providence, and Hotel Dolce Villa on Federal Hill, and the occupancy rate has fallen nearly in line with the national average -- 63.9 percent for Providence last year, compared to 63.1 percent nationally.
But hotel rates have continued to rise even as occupancy rates have fallen, and at a pace higher than the national average. The average daily rate in 2000 in Providence was $134.39. By last year it was $154. Nationally, the average rate was $85 in 2000, and had risen only to $90 last year.
Guedouar said that he doesn't see the new supply bringing down the prices -- in fact, he has increased his average daily rate by $6 this year, and other area hotels followed suit.
Providence is too attractive right now, and the hotels are doing too well, to make any kind of price concession, he said.
"I don't think so. On a WaterFire Saturday night, I offer $419 and I sell out," he said.
As the new Westin towers rose and the hollow Masonic Temple filled in with rooms, Martha Sheridan used e-mail as her weapon of choice. Event planners don't want to hear empty promises that hotels will be built in a city they're considering -- they want evidence that it's nearly done, or they will look somewhere else.
"There's an audience of planners out there who really want to see a property before they book it," said Sheridan, president and CEO of the Providence-Warwick Convention & Visitors Bureau, which markets the city to the convention industry.
So Sheridan has been active on e-mail, sending slides of cranes and other construction equipment active at the Westin and Renaissance construction sites, proof that their construction is proceeding and that planners should believe in Providence.
It's worked, she said. With the hotels nearing completion, Providence is now in conversations with groups that never would have expressed interest without the combination of the Hilton, the Renaissance and the expanded Westin.
"It's allowed us to be considered," she said.
The high rates, she said can be limiting to some convention groups -- but to others, a quality destination and the number of rooms it offers are far more important.
They recently signed the Community Transportation Association for a 2009 convention, which is expected to bring 2,000 delegates at its peak. The two new hotels were key in the sales pitch, she said.
Providence has conventions booked in the next few years that will be larger than the FOP convention in 2003, Sheridan said.
"This destination would not have been able to host them without these new hotels online," she said.
The state is also renovating the Dunkin' Donuts Center, and is increasingly hosting sports-related conventions, such as the U.S. Figure Skating Association next February and part of the 2010 NCAA Men's Basketball Tournament. The arena renovations will give the city 220,000 square feet of convention space in one location.
Providence has managed to combine buzz about its new development with its excellent reputation for arts and dining, and promote its signature attraction, WaterFire, to the degree that clients who they can attract generally become repeat clients, convention officials say.
"From a convention standpoint, and a convention planner standpoint, the city has gotten better," said the convention center's McCarvill. "The one thing about Providence is it overdelivers. The actual live experience of being here is really good. It's better than what they thought."
But while Providence appears to be improving its bookings, some of the success in booking conventions may be attributable to larger market trends, said Sue Pelletier, editor of Association Meetings Magazine, which covers the meeting industry.
After the Sept. 11 terrorist attacks in 2001, convention bookings dried up, helping to leave the 2004 and 2005 years sparse in Providence. "Post 9/11, everything went down the tubes and business was terrible," Pelletier said.
That forced the top convention destinations -- Boston included -- to lower their rates, opening them up to conventions which had previously gravitated to smaller cities because they were less expensive. "A lot of groups that wouldn't go to the first tier did, because now they could afford it," she said.
Now, the travel economy has rebounded, and this sellers' market means that hotel prices have risen again in the bigger cities. Now, smaller cities -- even Providence -- look cheap by comparison.
"[Big cities] are back in the driver's seat, which means that demand is now returning to the smaller cities, like Providence," she said.
Providence is not the only midsize city in the region that has improved its hotel and convention center situation -- and it's now facing competition from Connecticut casinos, as well.
Conventions are desirable for both the hotel and the restaurant markets. They provide new and reliable customers spending tourist dollars, and the early scheduling allows businesses to plan their staffing levels and inventories.
Hotels often look to fill up roughly two-thirds of their rooms with convention traffic (booked at reduced group rates) and then fill the rest with higher, leisure customers. Few hotels are built now without some meeting space, and many convention centers nationwide are expanding.
At the same time, convention traffic is valuable to the city, thanks to an extra 1 percent sales tax levied on lodging and meals, with the money funneled directly to the municipality. Providence is counting on more than $5 million from that source in the next fiscal year.
Providence's chief competitor, Hartford, opened a new 200,000-square-foot convention center in 2005, and Foxwoods and Mohegan Sun are diving further into the convention market. Next year, Foxwoods will add 115,000 square feet of additional convention space and a 30-story, 824-room hotel to its two existing hotels, and Mohegan Sun already boasts 100,000 square feet of meeting space and a 1,200-room hotel.
Leisure travelers who are looking to gamble will go directly to the casinos, and very large events looking for a single hotel destination will gravitate there as well. But on the whole, interviewees said that the casinos are not direct competitors for Providence, which either attracts a smaller customer, or one willing to spread out among several hotels.
"You're looking for the boutique market," said Pelletier of Association Meetings magazine.
In the industry, Providence's mid-level market is described with an acronym: SMERF. It stands for social, military, education, religious and fraternal groups. "They love markets like Providence," she said.
Nearby Hartford is seeking those customers as well.
But Riel, at the Renaissance, doesn't see Hartford as true competition -- not, at least, in the quality of experience Providence offers.
"You can blow a cannon through downtown Hartford on a Saturday. There's nothing going on. Not so Providence," he said.
And Providence has advantages that Hartford doesn't have. Proximity to Boston, the Connecticut Casinos and Newport. A location right on Route 95. A flourishing arts scene, and high-profile media references, like the movies and television shows filmed here. And, of course, Waterfire, which can be scheduled during a convention to give attendees the feeling that they are being specially catered to.
The new hotels should allow Providence to better compete with its benchmark midsize cities, but more hotel rooms are on the way -- at least 700 rooms worth -- enough to whet planners' appetite that Providence could someday be playing in an even bigger market.
Baltimore developer Struever Bros., Eccles & Rouse plans a 138-room hotel as part of its $139-million Dynamo House redevelopment of the former South Street Power Station on Eddy Street at the edge of downtown.
They had hoped to break ground this spring, but are still trying to secure financing, and begin work this summer.
"We're ramping up to try to get a loan closed this summer and then hopefully get work going," said Seth Handy, development director for Struever.
A proposed 160-room Sierra Suites Hotel slated for Washington Street downtown has all its permitting done and is preparing to start work. Calls to the developer, Kansas-based Lodgeworks, were not returned.
A 200-room Carpionato Properties hotel on a triangle of land next to the U.S. Post Office at Exchange Street and Memorial Boulevard has also been proposed.
And the condominium-hotel tower planned for 110 Westminster Street downtown is still alive, though no work has taken place since the site was cleared last fall.
Eamon O'Marah, a managing partner at developer Blue Chip Properties, said that the company hopes to break ground this summer on its 38-story tower, which has been radically redesigned to include a hotel. Blue Chip plans 206 hotel rooms rising to the 24th floor, and 76 condominiums from floors 25 to 38.
The developer is still in negotiations with the hotel company, the name of which has not been announced.
O'Marah would not disclose what the new cost of the project would be -- "we're still finalizing all our budgeting with the hotel," he said -- but he acknowledged that it had become "significantly more expensive" thanks to the redesign. The project's cost had previously been in the neighborhood of $105 million.
The hotel will have ballrooms, an indoor pool, and retail space. It would take 28 months to complete.
Part of the reason for the redesign was to tap into the low-risk, high-profit convention market -- a safer business than just building condos.
"We will cater to convention and meeting and tourism groups that don't want to stay at the convention center or at the mall," O'Marah said.
To that end, they're building in 15,000 square feet of meeting space. That's where the money is.
CURRENT HOTEL ROOMS: 2,124
1. Renaissance Providence Hotel
2. Westin Providence Hotel
3. Westin Residences and Hotel
4. Courtyard by Marriott
5. Biltmore Hotel
6. Providence Hilton Hotel
7. Hotel Providence
8. Providence Marriott Hotel
9. Dolce Villa Hotel
10. Providence Radisson
Proposed hotel rooms: 704
11. Providence Sierra Suites Hotel
12. Carpianato Hotel
13. 110 Westminster
14. Struever Hotel
To see more of the The Providence Journal, or to subscribe to the newspaper, go to http://www.projo.com.
Copyright (c) 2007, The Providence Journal, R.I.
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