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Indianapolis Metro Hotel Occupancy at Lowest Level in Six Years;
2009 Occupancy Was 52.9%, off 7.8% from 2008

By Bruce C. Smith, The Indianapolis StarMcClatchy-Tribune Regional News

January 26, 2010 --Completion of the Indiana Convention Center expansion and an influx of sports fans for the Big Ten and Final Four basketball tournaments can't come too soon for local hotels battling the recession.

Just-released figures show occupancy rates in 2009 were at their lowest in six years for hotel and motel operators in the Indianapolis metro region and across much of the nation. However, rates started to pick up in November and December.

Nationwide, hotel occupancy fell to 55.1 percent in 2009, down 8.6 percentage points from the previous year, according to a survey by Smith Travel Research of Nashville, Tenn.

In the Indianapolis metro area, the decline wasn't quite as steep. Occupancy of the region's 31,000 hotel rooms was an average 52.9 percent, off 7.8 percentage points.

Travelers are getting a break because hotel operators are deeply discounting their rates to boost occupancy.

Nationally, travelers paid an average daily rate of $97.51 last year, down 8.8 percent from 2008.

Research shows Indianapolis hotels are a comparative bargain. The average room rate in the metro region last year was $80.61, down about 7.8 percent from the previous year, and nearly $17 a night cheaper than the national average.

Into this mixed business environment will come the 1,626 upscale hotel rooms in the $450 million Marriott Place complex of four hotels, including the JW Marriott Indianapolis under construction Downtown. It includes the largest JW Marriott in the world.

About 600 of the rooms in the trio of smaller hotels -- a Courtyard by Marriott, Fairfield Inn & Suites and SpringHill Suites by Marriott -- are due to open next month. The rest are to be ready in a year, in time for the city to host the 2012 Super Bowl.

"I'm cautiously optimistic that the coming year won't be as bad as last year. There are a few upturns in the trends," said John Livengood, president of the Indiana Hotel and Lodging Association.

"We'll see a little improvement in occupancies, but it may take a while for the revenue figures to come back for the (hotel operators) who have been offering big discounts," he added. "It may be 2011 or 2012 before this thing finally pulls out."

Hotel operators say leisure and convention travelers are coming back as the economy improves. However, business travel may stay down because companies have cut back in the recession, and they are learning to operate with less face-to-face contact.

"There may be a new normal (of lower spending for business travel), and we probably won't bounce back to the high days we had a few years ago," Livengood said.

More rooms were sold in November and December than in those months in 2008 nationally, said Jan Freitag, vice president at Smith Travel Research.

"Indianapolis continues to weather the nation's economic storm better than other cities because we do offer affordable convention packages," said Chris Gahl of the Indianapolis Convention & Visitors Association. "Meeting planners are used to our affordable rates, and they find it alluring."

Gahl said 688,000 hotel room nights were booked in 2009 for stays in future years. That is 105 percent of the ICVA's goal, and it means an uptick may be coming in occupancy rates and in the local hospitality industry.

"In 2009, our Downtown hotels were occupied at 67.4 percent, which is higher than other downtowns, and it means we are maintaining a well-occupied hotel core. This is happening with amenities, convenience and affordability," Gahl said.

Key to the future of the metro region's hotel industry will be the planned opening next year of a $275 million expansion of the Downtown convention center.

The city hotels also get a boost this year from two NFL postseason games, the men's and women's Big Ten basketball tournaments and the men's NCAA Final Four.

Gahl said planners for big events, such as the 2012 Super Bowl, wouldn't even look at Indianapolis without a 1,000-room hotel like the Marriott complex.

"That hotel is a game-changer for Indianapolis. We now can compete against Chicago, Denver and, in some cases, with Orlando, for events requiring a convention headquarters hotel," he said.

How much of that added tourism business spills out of the Downtown to suburban hotels is unclear.

"We may not know for a long time about the effect of the expanded convention center and the Marriott. There is a little overflow from Downtown to the suburbs, but the suburbs don't get much push from Downtown anymore," Livengood said.

Indianapolis metro region hotels that opened in 2009:

Hilton Garden Inn Indianapolis Airport, March, 126 rooms, at I-70 and Ameriplex Parkway; next to Hampton Inn and Suites, 119 rooms, opened November 2008.

Candlewood Suites Indianapolis Northwest, 7455 Woodland Drive, May, 104 suites.

Hilton Garden Inn at Intech Park, 6930 Intech Blvd., August, 122 rooms.

Cambria Suites, Noblesville, August, 132 rooms.

Best Western Atrea, Plainfield, August, 67 rooms.

Comfort Suites Indianapolis Airport, 2750 Fortune Circle, West, November, 70 rooms.

Value Place, 8045 Rockville Road, May, 121 rooms.

Staybridge Suites, Carmel, December, 119 rooms.

Hotels in the metro region proposed to open in 2010 or later:

Courtyard by Marriott, February, 296 rooms, Downtown, connected to the Indiana Convention Center.

Fairfield Inn & Suites, February, 168 rooms, Downtown, connected to the Indiana Convention Center.

SpringHill Suites, February, 156 rooms, Downtown, connected to the Indiana Convention Center.

Candlewood Suites, May, I-70 and Shadeland Avenue, 81 suites.

Hotel Indigo Carmel, 104 rooms.

Hotel Indigo Plainfield, 105 rooms.

Staybridge Suites Northwest Indianapolis at Traders Point, 97 suites.

LaQuinta Inn and Suites, Plainfield, 98 rooms.

Suburban Extended Stay Hotel, eastside airport, 118 rooms.

Embassy Suites, Ameriplex, westside airport, 150 suites, restaurant.

Hotels to open in 2011:

JW Marriott, Downtown, 1,005 rooms plus 104,000 square feet of meeting and event space, connected to the Indiana Convention Center.

Call Star reporter Bruce C. Smith at (317) 444-6081.

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Copyright (c) 2010, The Indianapolis Star

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