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After a Disappointing 2008, Philadelphia Hotels
 Bracing for a Tougher 2009
By Suzette Parmley, The Philadelphia InquirerMcClatchy-Tribune Regional News

January 30, 2009 - After a disappointing 2008, Center City hoteliers are preparing for their toughest year since the 9/11 terrorist attacks crippled the hospitality and travel industries.

The city is projecting a 65.7 percent hotel occupancy for 2009 as it will play host to far fewer convention attendees than last year, according to a report released this week by PKF Consulting, which tracks the region's hospitality industry.

The last time the city's hotels ran 65 percent occupancy was in 2002.

"It will be challenging," said Peter Tyson, vice president of PKF Consulting, author of the report. "It will be across the spectrum. There won't be any market segment left unaffected, which is typical for a recession."

Hoteliers are bracing for the reality of fewer conventioneers filling their rooms, as companies continue to reduce workforces and trim corporate travel. This usually means sending fewer people to conventions and meetings and reducing their time spent away.

"They'll still participate," said Ed Grose, executive director of the Greater Philadelphia Hotel Association. "But they will participate at a reduced level.

"It's not limited to Center City, but everyone in the region," Grose said. "It's hitting every service level, every size. In short, every type of hotel."

For the first three weeks of this month, Center City hotel revenue was down 24 percent compared with January 2008. Hoteliers said this was primarily because there were no major conventions in town, compared with two in January 2008. There are no major conventions here next month either.

Business, convention and leisure make up the three major market segments for Center City hotels. Only leisure was up last year, by about 3 percent, while business and convention each were down more than 5 percent.

Center City hotels saw fewer guests and lower revenue per available room as 2008 wore on. Only a strong convention month in November and the Army-Navy game in December kept the numbers from being even worse. The city's hotels were also helped by the Phillies' playoff and championship run in October.

Overall, the average room rate was up 2.7 percent last year, which helped offset the drop in demand, or occupancy, of 3.4 percent. This allowed revenue per available room to stay relatively flat at $122.44 for the year.

Compared with other major cities, Philadelphia's downtown hotels performed in line or better.

Chicago's downtown hotels had a 4.4 percent decrease in occupancy in 2008; Boston's were down 2.9 percent; and Manhattan hotels had a 1.0 percent decrease.

Hotels continue to be built nationally, and that includes Center City Philadelphia. Last month, the 92-room Four Points by Sheraton at 12th and Race Streets opened. The 235-room Hotel Palomar by Kimpton at 17th and Sansom Streets will debut in the old Architects Building in November.

The DoubleTree Hotel Philadelphia provided a snapshot of the challenging environment. The 432-room hotel, which caters largely to corporate travelers and the leisure customer on weekends, had a decrease in occupancy from 80 percent in 2007 to 76 percent last year.

General manager Bill Fitzgerald said group, business and leisure stays were all down substantially this month.

"The individual traveler during the week is not there, and the leisure traveler on the weekend is also down," he said. "It will be a rough go as far as 2009."

Contact staff writer Suzette Parmley at 215-854-2594 or sparmley@phillynews.com.

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To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to http://www.philly.com.

Copyright (c) 2009, The Philadelphia Inquirer

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