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Lodging Industry in Kansas City Reports Worst Occupancy in a Decade
By Rick Alm, The Kansas City Star, Mo.
Knight Ridder/Tribune Business News 

Feb. 5--The lodging industry in Kansas City posted its worst year in a decade as occupancy rates in 2001 slipped to their pre-boom, 60 percent levels of 1991-1992. 

Local market expert Jeff Marvel said the drop from 63 percent in 2000 "reflects the stagnant first half of the year...that deteriorated rapidly after Sept. 11." 

Marvel's year-end report was not all bad news. 

"In today's reality," he said, "the absolute 60 percent level of the market is still quite healthy." 

And the outlook is at least a little brighter than it appeared on Sept. 11. 

Marvel, chief executive of Kansas City-based Horwath Horizon Hospitality Advisors LLC, said he was cautiously optimistic about a slow but steady recovery over the next four or five quarters as both the economy and demand for hotel rooms rebounded. 

"Should the economic recovery gain traction...the industry may resume the healthy and balanced growth achieved in recent years," Marvel said. 

On the upside, Marvel said some of the region's more aggressive hotel investors ware beginning to stir in 2002, with the Kansas Speedway in Kansas City, Kan., and a new convention center in Overland Park triggering most of the interest in new construction. 

The metropolitan area offers an inventory of more than 26,000 hotel and motel rooms, ranging from budget-class quarters that rent for an average of $40 a night, to luxury accommodations that typically go for $106. 

Local occupancy rates peaked at almost 71 percent in 1996 after hovering at record lows of 60 percent and 61 percent between 1987 and 1992. 

Marvel noted that the sharp growth in occupancy in the mid-'90s was tempered by parallel increases in supply. It wasn't until 2000 that occupancy growth, or demand, outpaced the growth in supply. 

The weak performance of 2001 saw supply up a modest 2.9 percent, to 26,675 total rooms, and demand down by around 3 percent. During the mid- to late-'90s, supply and demand both grew at a balanced 4 percent rate, Marvel said. 

Only one lodging category showed an increase in occupancy last year. Economy-priced rooms were up less than 1 percent, to 58.8 percent. The average economy room rented for $47.27 last year, down from $48.42 a year ago. 

Budget rooms fell the farthest in 2001, with occupancy dropping 5 percentage points, to 60.4 percent. 

Hotels north of the river near Kansas City International Airport posted the year's strongest occupancy rate, 63.5 percent. 

-----To see more of The Kansas City Star, or to subscribe to the newspaper, go to http://www.kansascity.com. 

(c) 2002, The Kansas City Star, Mo. Distributed by Knight Ridder/Tribune Business News. 


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