News for the Hospitality Executive
Salt Lake City's Hotel Industry Avoids Post Olympic Depression;
Sustains Occupancy, Debunks Myth City is Overbuilt
|By Mike Gorrell, The Salt Lake Tribune
Knight Ridder/Tribune Business News
Sep. 23, 2004 - While many individual Utahns fell victim to the blues after the 2002 Olympics ended, the post-Games performance of Salt Lake City's hotel industry has avoided the depression that afflicts most host cities of Winter Games.
Despite the addition of new rooms as part of the Olympic buildup, hotel occupancy percentages this year bounced back to exceed pre-Games levels, according to a new report from Jones Lang LaSalle Hotels, a Chicago-based hotel services investment group that operates in more than 100 markets on five continents and counts among its clients The Kempton Group, owner of the Hotel Monaco.
Jones Lang LaSalle advises clients on everything from mergers and acquisitions to strategic planning, operator assessment and asset management, and in 2003 was involved in the sale of 12,249 hotel rooms worth about $2.4 billion.
"We do a lot of research on Olympic cities," added company spokeswoman Kristina Paider. "They're hot, interesting and exciting, and our clients want to know about them."
What Jones Lang LaSalle will tell those clients about Salt Lake City is that its hotel industry experienced "an unusually strong rebound for the second year following the Olympics."
Winter Olympic hosts usually have two years after the Games in which their "RevPAR" numbers -- revenue per available room -- drop.
Salt Lake City's did in 2003, when occupancy rates dipped to 60.3 percent from 64.1 percent in 2002 and 61.8 percent in 2001, the year leading up to the Games.
But this year's occupancy numbers bucked the trend. Through the end of July, the city's hotel rooms were 63.5 percent full on any given night. And in July itself, the rate rose to 69.1 percent.
"Salt Lake City has embarked on a trend of its own -- proving that hotel occupancy can be sustained and debunking the myth that the city is overbuilt," said company vice president Melinda McKay. "As an Olympic host, Salt Lake City demonstrated its ability to host major world-class events, and boasts an Olympic legacy of sporting, tourism and municipal infrastructure."
Two other recent developments also prompted McKay to conclude Salt Lake City's economic prospects look good: decisions by Delta Air Lines to move some of its Dallas/Fort Worth operations to Utah, and Nordstrom Inc. to stay in downtown Salt Lake City.
In her Olympic studies, McKay has found that several factors combine to impact a host city's ability to "leverage the catalyst provided by the Olympics to gain significant long-term benefits. . . . While the Games generate short-term economic gains, such as more jobs and increased revenue, the real gold is in the long-term changes to the urban fabric of the city."
Influential factors include the competitiveness of the business environment, quality of tourism attractions, the ability to use the Olympic experience to attract other major world events, the level of tourism infrastructure built for the Olympics and ongoing promotional campaigns that she said were "critical in translating short-term interest into long-term benefits."
Utah's tourism industry is lobbying hard to secure legislative approval for state funding to bolster lagging out-of-state promotions.
McKay's recent analysis of Athens determined its primary legacies will focus on urban regeneration (creating inner-city parks and unifying the city's archaeological sites), creating an Olympic Village that will become an urban center, significant infrastructure improvements, particularly to its transportation system, and increased concern for environmental issues.
One area in which Athens has fallen short, in McKay's estimation, is in promoting itself as a tourism and convention center. The city still does not have a convention center, only a few international-standard hotels and did not appoint a tourism minister until earlier this year.
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