May 7--Waukesha County has too many hotel rooms even as municipalities aggressively seek new hotels at the expense of existing inns, a new report from the Waukesha County Economic Development Corp. says. 

The report also says the county's tourism promotions are fragmented, with 37 cities, towns and villages "fighting among each other" for tourism dollars. 

Based on input from more than 40 representatives of area hotels and restaurants, the report points out numerous problems in the hospitality industry, including a glut of hotel rooms. 

"During the last four years, 1,000 hotel rooms have been -- or are soon to be -- added to the Waukesha County area, including 500 luxury rooms," the report notes. "Area municipalities have aggressively sought and recruited new hotels and restaurants . . . at the expense of existing businesses." 

Average hotel occupancy rates in the county have dropped 20 percent since Sept. 11, largely because of the economy and cuts in business travel. Moreover, the demand for hotel rooms hasn't kept pace with the construction of new rooms, according to the Waukesha-Pewaukee Convention and Visitors Bureau. 

Two major flurries of hotel development in the past six years have almost quadrupled the number of available rooms in Waukesha County, said Greg Hanis, a hotel industry analyst and president of Hospitality Marketers International in the Village of Pewaukee. 

"All of this has happened without allowing demand to catch up with supply," he said. 

City of Brookfield hotels have been hit hard by the growth of hotels along the I-94 corridor between Brookfield and Delafield, Hanis said. For the first quarter of 2002, for example, gross sales at Brookfield hotels were at their lowest point in seven years. 

The report says that controls should be placed on hotel development to protect the marketplace from becoming saturated. 

"Commercial development is uncontrolled and haphazard -- especially in small communities," according to the report. 

But municipalities aren't likely to see it that way, Hanis said. 

"It's free enterprise," he said. "If developers want to put their money into something, it's their money." 

Construction of a 150-room Double Tree Hotel & Conference Center is under way in Menomonee Falls, with a planned opening in 2003. 

"But they came to us; we didn't recruit them," said village President Joe Greco. "The developers had a feasibility study that very clearly showed the need for the hotel" near Woodland Prime Office Park. 

Steve Zilli, co-owner of the Grandview Inn restaurant in Waukesha, said he and his business partners are planning a 90-room hotel along Capitol Drive near Highway J in the Village of Pewaukee. They also are building a Baymont Inn hotel in Johnson Creek. 

There's room for upscale hotels to fill niche markets in Waukesha County, Zilli said. 

But declining room occupancy rates show the area hotel market is saturated, said Kirk Drusch, general manager of the Embassy Suites in Brookfield. 

"This isn't rocket science," he said. "There are only so many travelers coming here," and yet more hotel rooms are being built. 

In metropolitan Milwaukee, there are 122 hotels with a total of 15,000 rooms, up 7 percent from March 2001 to March 2002, according to Smith Travel Research, a Nashville, Tenn., hotel industry research firm. 

That increase is more than three times the national average, said Robert Bowers, vice president of marketing for Smith Travel Research. 

Meanwhile, the average occupancy rate for Milwaukee-area hotels was 54 percent in that same period, compared with 60 percent for the national average, Bowers said. 

Promotion effort is questioned 

The Waukesha County report criticizes tourism promotions as being fragmented and ineffective. 

"The area is not a travel destination," the report notes. "It's a pass-through destination for people on the way up north. . . . Waukesha County hasn't done a good job of positioning itself as a final destination." 

The report recommends an areawide effort to promote Waukesha County as a "casual, relaxing, yet culturally interesting" place for Chicago's North Shore residents to visit. 

"There's concern, however, that if tourism groups are combined, who will be the 'top dog'? What will communities have to give up in the process," the report notes. 

Tourism directors are working harder at area cooperation, said Tammy Tritz, executive director of the Waukesha-Pewaukee Convention and Visitors Bureau. 

"I agree that we can't be successful by ourselves," she said. "If you look at Waukesha, for example, the attractions are limited. So we have to promote the entire area as a tourism destination" to give people more reasons to visit. 

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(c) 2002, Milwaukee Journal Sentinel. Distributed by Knight Ridder/Tribune Business News.