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Connecticut Hotels Start Slow March Out
 of Stubborn Recession

By Patricia Daddona, The Day, New London, Conn.McClatchy-Tribune Regional News

September 12, 2010 - --From budget hotels to casino resorts, and from independents to chains, the demand for lodging in southeastern Connecticut is recovering from a stubborn recession, though room rates continue to lag.

"Much like the rest of the hotel industry, we've seen gains in occupancy over the prior year," said Karen Bachofner, vice president of sales and revenue management for the Waterford Group. "Average daily rates are down and recovering slightly. So we are following the trend."

The Waterford Group owns seven properties here, including Groton's Mystic Marriott. Average daily rates represent room revenue divided by rooms sold, and do not include extras like services.

Smith Travel Research of Hendersonville, Tenn., which tracks supply and demand data for the hotel industry and analyzes markets from the U.S. to Europe and Asia for major hotel chains and brands, confirms that trend. In New London County, occupancy increased from January to July by 6 percent, while rates dropped by two-tenths of a percent, STR found.

The Connecticut Lodging Association, whose members number about a third of the hotels in the state, provided similar figures. Year-to-date occupancy increased by 5.9 percent, but rates decreased by one-tenth of a percent, said Ginny Koslowski, the group's executive director.

Similarly, New England shows a year-to-date occupancy increase of 9.6 percent and drop of five-tenths of a percent in rates, STR data show.

"It's no different during a gradual recovery than at any other time," said Jeff Higley, vice president of digital media and communications at STR. "As long as demand is increasing, you watch average daily rate, and as long as you can drive your rate up, that's the positive sign we're looking for."

Nice summer weather factored into June and July increases, hotel managers and owners said. But over the past year, some said, many properties cut rates to entice customers and are now having to recover from that as well as the economic doldrums, the H1N1 scare, and the backlash on executive retreats to exotic resorts that crimped business for many.

"In general, we feel there was a little too much discounting that they did not need to do," said Higley, referring to New England hotels as a whole. "What happens is, the hotel will follow its weakest competitor, and when that happens it's almost an effort to keep up with the Joneses.

"But with that said, they have to pay the bills, so they were trying to drive more people to their hotel, but historically the evidence is clear: discounting alone does not increase your occupancy. It doesn't create more demand; it just moves the demand around."

Here in Eastern Connecticut, hotels are recovering from the rate cutting that was done last year "almost across the board ... to maintain cash flow and occupancy," said Ed Dombroskas, executive director of the Eastern Regional Tourism District. It's like having to put the genie back in the bottle, he said, since more travelers now tend to look for those discounts and package deals.

"With pure leisure travel, packaging seems to be king," Dombroskas said. "Its value is perceived by the consumer and that attracts business."

Nancie Keenan, general manager of the Groton Inn & Suites in Groton, said discounts and packages will continue to have a place in the hotel's overall strategy to attract the leisure traveler.

General Manager Bob Jackson of the Radisson Hotel New London said the Radisson didn't lower rates, but priced itself competitively with the market.

Both operations struggled early in the year. Groton Inn and Suites saw an 8 percent decline prior to July, and the Radisson was down 5 percent in that time frame.

The Waterford Hotel Group, which would not share data, had lowered rates last year to attract customers, but is now looking to bump them back up as demand rises.

"As the economy recovers I would expect travel to recover and tourism will recover," Bachofner said. "And if there was more marketing for the state and tourism that would certainly help us become more successful next year."

Different sized properties also have managed rates differently, Dombroskas said.

"Higher end properties are very much dependent on business travel and group travel, and they're seeing a slight recovery," he said. "(For) small properties, it all relates to marketing: if they're out there promoting their property then they're attracting occupancy."

Meanwhile, the Mohegan Sun hotel has maintained occupancy just shy of 96 percent for the past fiscal year, which runs from October to September, and its overflow tends to spill into area hotels, said Chris Perry, vice president of hotel sales and marketing.

"It's very different from a normal hotel because the majority of our hotel rooms go to our gaming patrons," he said. "They get a higher discount or complimentary room. The luxury with us is, we've been able to maintain rates in leisure because we maintain such a high occupancy rate."

The tribal casino also directs some of its overflow to the Hyatt Place in Montville, and the Marriott Courtyard and Holiday Inn in Norwich, he said.

The rebounding of business travel, whether through conferences or corporate traffic, is what's really needed to put most hotels back at the top of their game, owners and managers said. And that's starting to happen, Perry said. Businesses that had been making reservations 45 to 60 days out are now beginning to plan further ahead, he said.

"I'm confident that business is returning," Perry said. "Companies are starting to travel again. Business travel drives the majority of hotel occupancy across the country and if that happens and all those companies are traveling again, that's the foundation of all hotels."

Tangible recovery may not really take hold until 2012, however, Perry said. In the meantime, Bachofner and Keenan want the state to restore marketing funds. Keenan also has her sights set on the fall season, when reunions and conferences help boost business.

Dombroskas thinks that providing a way for travelers to book area hotels through the www.mystic.org website could help lure visitors here. It's a strategy he is investigating that could materialize next year.

"What's it going to take?" wondered Jackson. "That's the million dollar question. You try to be competitive and give great service. That's what everyone is looking for."

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To see more of The Day, or to subscribe to the newspaper, go to http://www.theday.com.

Copyright (c) 2010, The Day, New London, Conn.

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