News for the Hospitality Executive
|By Tom Belden, The Philadelphia Inquirer
Knight Ridder/Tribune Business News
Feb. 4, 2004 - Heavy advertising and aggressive salesmanship helped fill a surprisingly large number of hotel rooms across the Philadelphia region in 2003, but achieving that result hurt the bottom lines of the hotels, according to figures released yesterday.
Hotels in Center City filled 66 percent of their available rooms in both 2003 and 2002, despite a prediction at the start of last year that occupancy would be about 61 percent because of a plunge in the number of large groups using the Convention Center, said Peter R. Tyson, chief operating officer of Smith Analytics L.L.C.
"The demand held up a lot better than we expected," Tyson said.
The Center City occupancy figures were skewed by the closing of two hotels, the Clarion Suites and the Hawthorn Suites, and by others converting rooms to apartments, which pushed down the supply of Center City rooms by 2.4 percent, to 10,892, Tyson said. Center City hotels thus filled fewer rooms last year than they did the previous year.
The number of big citywide conventions that fill thousands of hotel rooms dropped to 18 in 2003 from 27 the year before, largely because labor strife at the Convention Center in recent years scared away business, the Philadelphia Convention and Visitors Bureau said.
Fifteen citywide conventions are scheduled for the center this year.
Citing data collected by Smith Analytics' affiliated company, Smith Travel Research, Tyson said hotels throughout the region filled 64 percent of their rooms both last year and the year before.
The number of hotel rooms across the region stayed flat, at 41,171.
For hotel owners and managers, the higher occupancy rate has to be weighed against what it cost to get it: cutting rates and offering two-nights-for-the-price-of-one deals such as those featured in the "Philly's More Fun When You Sleep Over" ad campaign run by the Greater Philadelphia Tourism Marketing Corp.
The average daily room rate in Center City in 2003 was $126, compared with $133 the year before, Smith Travel Research said.
Across the region, the average rate was $93 a night, while it was $96 in 2002.
The rate discounting wound up generating 5 percent less revenue for each room sold for the Center City hotels, and 3 percent less revenue per room sold for all the area's hotels.
"From an owner's standpoint, they've taken a hit," said David Newhart, president of the Greater Philadelphia Hotel Association and general manager of the Hilton Inn at Penn. "The hotels are still not where they were in 2000. As a prudent businessperson, you want your rate to go up a little every year."
While hoteliers were disappointed, other hospitality officials noted what was achieved last year in the face of a poor climate for business travel and the lack of large conventions.
Besides the two-for-one promotional campaign aimed at leisure travelers, the convention bureau and individual hotels worked hard to get companies, especially those based in the region, to hold smaller meetings and conferences locally, said Jack P. Ferguson, the bureau's vice president of convention sales.
Sam Rogers, the bureau's vice president for tourism, said that final figures for 2003 were not in yet, but that he was confident that the number of leisure travelers visiting Philadelphia from Europe was up. The bureau is in the second year of a promotional campaign aimed at residents of Britain, France, Germany, Italy and the Netherlands, he said.
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(c) 2004, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News.