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Tuscon Hotels Report August 2004 Occupancy at 64.4%,
 Inching Back To 2000 Levels

The Arizona Daily Star, Tucson
Knight Ridder/Tribune Business News

Oct. 9, 2004 - Tucson-area hotels and resorts are inching back toward the rates they charged during the boom years before the 9/11 terrorist attacks.

But some in the hospitality industry ponder whether the dream of matching those golden years is hopeless.

"The year 2000 before the attacks is still the benchmark people in the restaurant industry use when they measure success," said Rob LaMaster of the Arizona Restaurant & Hospitality Association.

"I hear restaurant owners and hotel managers say, 'I'm up over last year but still not at 2000 levels.' What they forget is, that was also the year the dot-com bubble broke. We realized we were in an overheated economy that couldn't last. Companies with no profits had been raking in investment money and spent a lot on travel, hotels and restaurants -- even when they shouldn't." In August 2002, almost a year after the terrorist attacks, occupancy rates in the Tucson area had dropped 5.9 percent compared with the previous August; the average room rate had fallen 8.7 percent -- to $51.82 -- and revenue had declined 6.8 percent, according to Smith Travel Research, an industry analyst.

Jump ahead to August 2004 and it's a completely different story. That month occupancy rose 1.7 percent to 64.4 percent, versus a year ago, when the average room rate was $52.13 -- up 3.3 percent -- and total revenue increased 4.1 percent.

Prices, occupancy and revenues are climbing due to one simple factor: demand, says Bruce Richardson, director of sales and marketing at the Doubletree Hotel at Reid Park.

"Honestly, I think that we're at a point that it's not necessarily an entirely buyer's market anymore," Richardson said. "I think more people are traveling. Certainly more convention business is out there." Tucson's newest resort, JW Marriott Starr Pass, is proof of that. Nestled in a saguaro cactus forest in Tucson Mountain Park, the resort has sold out all its rooms for the official opening date of Jan. 2, snapped up by a convention of sunshine-starved Canadian pharmaceutical executives.

The resort offers a luxurious spa, an 18-hole championship golf course, tennis courts, seven restaurants, conference rooms and casitas, with rooms ranging from $389 to $499 in season. That compare to rates of $295 to $355 a night in season at another posh Tucson resort, Loew's Ventana Canyon Resort.

But Starr Pass sales and marketing director Mike Kass says Marriott, which also owns the Ritz Carlton chain, believes tourists will accept the price bump.

"Normally, hotel industry people in Tucson feel that Phoenix and Scottsdale have the edge recruiting high-end travelers but we are very confident in the Tucson market," Kass said. "Demand has actually exceeded our expectations here. We're offering guests Ritz Carlton-level service but with a more approachable touch. The test is whether the economy will recover enough for people to continue buying that service." The American Hotel & Lodging Association sees the hotel rate bounce as a national trend. The lodging industry grossed $105 billion in 2003, up from $102 billion the previous year.

"Tucson overall, occupancies are stabilizing. And at the same time rates are stabilizing for this year also, which bodes well for this year and for 2005," said Jan Freitag of Smith Travel Research. "Tucson is bound for growth."

By Lynda Edwards and Tiffany Kjos

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