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Peoria Area Hotels Experiencing Toughest Winter in 10 Years;
Running Less than 50% Occupancy

By Steve Tarter, Journal Star, Peoria, Ill.McClatchy-Tribune Regional News

January 12, 2010 --PEORIA -- The recession has hit the lodging industry hard. Just ask Sami Qureshi.

"This is the toughest winter I've seen in the 10 years I've been in Peoria," said Qureshi, the general manager of the Holiday Inn City Centre, the city's largest hotel with more than 300 rooms.

As president of the Heart of Illinois Hospitality Association, Qureshi knows it's bad all over. "The city's hotels are running less than 50 percent occupancy. It used to be in the upper 50s or low 60s," he said.

Peoria is not alone when it comes to problems in the hotel industry. Consultant Mark Lomanno of Smith Travel Research in Hendersonville, Tenn., reported that the national demand for hotel rooms in 2009 fell below the dip the lodging industry experienced immediately after 9-11.

The Atlanta-based PKF Hospitality Research group reported that, in 2009, the U.S. lodging industry experienced the greatest annual decline in revenue since 1932.

What makes matters worse for central Illinois innkeepers is that, while demand has decreased, the number of area hotels has increased in recent years.

The Illinois Hotel & Lodging Association now lists 24 places to stay across metro Peoria with clusters of hotels to be found in Downtown Peoria, East Peoria, Morton and around both Northwoods Mall and the Shoppes at Grand Prairie.

A hotel's location is vital and perhaps the biggest reason that the Castle Lodge, 117 N. Western Ave. -- which is in a mostly residential area -- closed last month, said Qureshi. "In my opinion, it's not coming back as a hotel," he said of the 160-room facility that flew the flag of the Radisson hotel chain from 2004 through early 2009.

Originally known as Jumer's Castle Lodge, owner Jim Jumer, who died in 2008, talked about the hotel's problems in an interview with the Journal Star in 2001. "People wanted to be downtown and on the riverfront, not on the west bluff. People did not want to hunt for their hotel," said Jumer, whose regional hotel chain filed for bankruptcy in 1999.

The demise of Jumer's Castle Lodge is indicative of how the industry has changed, said Bill Carter, general manager of the Hotel Pere Marquette. "(Jumer's) had a lot of regular customers in the 1970s and 1980s. That customer may not be around anymore," he said.

The Pere Marquette has also been challenged by changing times. Built in 1927, Peoria's oldest hotel and a Downtown landmark awaits an ambitious multimillion-dollar overhaul that will connect it by skywalk to the Peoria Civic Center.

When completed, the $100 million hotel project spearheaded by East Peoria business developer Gary Matthews will be managed by the Marriott Corp.

While the project, involving substantial investment by the city of Peoria, has stalled because of the economy, Carter is confident that everything will come off as planned.

"We're going to be able to generate our own business. It's going to be a new ball game," he said.

Even the area's newest full-service hotel, the Embassy Suites, the riverfront facility that opened in East Peoria in 2008 and was later cited as the top performer in the Embassy chain, has suffered, said manager Joe LoMonaco. "It's been tough all over; 2009 was a miserable year," he said.

"Indications are that 2010 may be better but the industry is still pretty stagnant," said LoMonaco.

The corporate slowdown has hit hard, he said. "Caterpillar has been a strong partner but everyone has cut back. Every business has felt it," said LoMonaco.

Despite recent hotel growth in the area, the Peoria lodging industry isn't saturated, said Rick Edwards, who is chairman of the board of the Peoria Area Convention and Visitors Bureau. "With the expansion of the Civic Center's exhibit space, business will pick up again when the economy rebounds," he said.

"It's extremely competitive as Peoria looks for business along with other convention centers. Many places have lowered rates as a result. We're sure looking for an uptick," said Edwards, who has been acting director of the bureau since the resignation in late September of former director Brent Lonteen. Edwards said a new permanent director could be named as early as this week.

Also looking for an upturn is Kathi Williams, the sales director at the Grand Hotel, 4400 Brandywine Drive, a hotel that dropped its affiliation with the Ramada chain last year.

"We haven't really seen a significant decline in bookings since we dropped the Ramada name but it's all about being in survival mode," she said.

Operating a 240-room, full-service hotel without a national chain to provide marketing support is a challenge, but the hotel has plenty to offer, said Williams.

"I can attract a conference that needs meeting space. We have our atrium and conference center to sell," she said.

While waiting for an economic rebound, Qureshi said one of the biggest challenges is to keep hotel staff motivated during hard times.

"It's up to us to keep things going," he said.

Steve Tarter can be reached at 686-3260 or starter@pjstar.com.

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Copyright (c) 2010, Journal Star, Peoria, Ill.

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