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 Philadelphia Center City Hotels Boost
Occupancy in November to 71.3%
By Maria Panaritis, The Philadelphia Inquirer
Knight Ridder/Tribune Business News 

Jan. 19, 2004 - Even as tourism rebounds in Center City, thousands of hotel rooms in the Southeastern Pennsylvania suburbs remain unfilled. 

Hotel occupancy in Bucks, Chester, Delaware and Montgomery Counties rose no higher than about 63 percent in November, compared with 71.3 percent in Center City. The four counties account for about 17,000 of the region's hotel rooms; there are 15,000 in Philadelphia. 

There was a sharp increase only in Bucks County, where aggressive campaigns to lure tourists to bucolic getaways and historic enclaves have helped reverse steep declines. But even there, room occupancy reached only 63.8 percent, from a lackluster 54.4 percent in November 2002. 

In the other three suburban Pennsylvania counties, where hotels largely serve business travelers passing through the region's office complexes, occupancy lingered about 60 percent, roughly the industry's break-even point for profitability. 

Suburban convention and tourism officials said their corporate corridors -- and the tax receipts generated by hotel revenues -- remained casualties of the struggling national economy, which has forced businesses to trim training programs and conferences from their budgets. 

One official suggested that Philadelphia hotel and tourism officials also had contributed. They said the city had reached into the suburban market to make up for lost big-ticket conventions there. 

"The corporate transient business is in the dumps," said Jesse Walters, executive director of the Chester County Conference and Visitors Bureau, which serves portions of the Route 202 business corridor. 

"Corporate is a market that has just about dried up for everybody," said Blair Mahoney, executive director of the Brandywine Conference and Visitors Bureau in Delaware County. 

And although occupancy in Montgomery County hotels showed signs of recovery by increasing in almost every month of 2003 over the previous year, officials still long for the soaring numbers of the mid-1990s, when guests filled up to 73 percent of available hotel rooms. 

"We were going gangbusters," said Paul Decker, president of the Valley Forge Convention and Visitors Bureau. "And then 2001 comes along, where we have a combination of the economy going south from midyear and the disaster in September." 

"I think it will be several years before you see those types of numbers come back to the hospitality industry," Delaware County's Mahoney said. "It's been a slow, progressive decline in occupancy. Recovery is not going to happen quickly." 

Hotel occupancy in the region began dropping a few years ago. New hotels increased the supply of available rooms about the same time that the national economic decline was taking hold. 

Belt-tightening corporations cut travel expenses. That drove down the number of rooms filled and forced hoteliers to reduce rates, which in turn has lowered county revenues from hotel tax receipts. 

Income generated by these taxes -- 2 percent in Montgomery, Delaware and Chester Counties, and 3 percent in Bucks County -- is used to finance tourism and convention marketing. 

All four counties have had gross receipts decline or, at best, merely recover lost ground. 

"The total collections on the room tax have gone down every year since 2000," said Walters of Chester County, where many of the 4,000 hotel rooms are along the Route 202 business corridor. 

Receipts in 2001 were $1.32 million, but dropped to $1.24 million in 2002, the last year for which official figures are available, Walters said. 

"The biggest culprit is people renegotiating their rates," Walters said. "A company may have a particular corporate rate with a hotel that's supposed to be good for all of 2003 -- and halfway through the year [customers] say, 'We're going to switch to the hotel across the street unless you cut our rate.' " 

Disappointing figures also were reported in Montgomery County, which has about 7,000 hotel rooms. 

Tax proceeds from hotel revenue were $2.77 million in 2001. They dropped to $2.57 million in 2002 and were expected to inch up to only $2.58 million last year, Decker said. 

One reason behind the sustained suburban slump may be competition from the region's urban core: Philadelphia. 

Organized-labor woes at the Convention Center hurt bookings. That, some say, prompted city hotels and marketing executives to launch a survival campaign that took aim at suburban accounts. 

Philadelphia hotels in late 2001 began to reach out to a type of business that previously had belonged primarily to suburban hotels: smaller group gatherings. 

"Those hotels started going after the same business that suburban hotels were going after: smaller meetings... the social, military, ethnic, religious and fraternal market, in order to get their occupancy back up," said Keith Toler, executive director of the Bucks County Conference and Visitors Bureau. 

Toler said the Philadelphia campaign, in effect, poached from its regional counterparts. 

"But it's business," he said. 

So Bucks has taken a page out of Philadelphia's Machiavellian playbook. The county launched 2003 with a marketing vengeance to recover from a troubling 2002, when occupancy dropped almost every month. 

The primary strategy: attracting weekend travelers with such offerings as "romantic getaway" packages and free hotel stays -- a model first used by the Greater Philadelphia Tourism Marketing Corp. to boost Center City tourism. 

"We have packages that we're selling," Toler said, "and much more targeted marketing." 

Bucks County ended 2003 with rising room rates, occupancy, and hotel tax receipts, he said. 

The county's target audience is urbanites. The lure is Bucks' escapist assets: museums, country inns and historical attractions in the winter, and outdoor activities and family-oriented amusements in the summer. 

"Since we have most of the population of the Eastern Seaboard within a one-day drive of us, we have chosen to focus on the leisure-drive market," said Linda Brinker, assistant director of the county conference and visitors bureau. 

That same market has proved crucial to the success of Center City's struggling hotels. 

"We are friendly, regional competition," Brinker said. 

-----To see more of The Philadelphia Inquirer, or to subscribe to the newspaper, go to 

(c) 2004, The Philadelphia Inquirer. Distributed by Knight Ridder/Tribune Business News. 


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