Hospitality business flat, but glimmers of hope are lurking

By Kevin Zimmerman

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The hospitality business in both Westchester and Fairfield counties is flat when compared with the past year, and it seems likely to stay that way in the near future. That may not seem like particularly good news, but most observers say that the 1 to 2 percent growth they currently see is better than losing ground.

“It’s not great,” said Dan Conte, general manager of the Westchester Marriott in Tarrytown and president of the Westchester Hotel Association. “Room occupancy is back to pre-recession (2008) levels, but the average room rate is still 20 to 30 percent off from then. I compare it to selling peaches at 69 cents each in 2008 to selling the same number now at 49 cents each … you’re doing the same amount of business but making considerably less money.”

According to Westchester County Tourism & Film, hotel activity in the county reached new levels last year, with room demand (as measured by hotel room nights filled) up 8 percent to 1.7 million and hotel occupancy rising from 70 percent to 72.7 percent compared with 2014. However, as Conte indicated, the average daily rate (ADR) remained essentially unchanged at $160.02.

“We’re on pace to be flat in 2016,” said Natasha Caputo, the county agency’s director.

The picture is similar in Fairfield County. Hotels saw room receipts rise to $233.1 million from $221.3 million the previous year — a 5.3 percent increase, according to the Connecticut Department of Revenue Services — but the Connecticut Convention & Sports Bureau (CTCSB) did not have comparative ADR and occupancy rates available (the current ADR is $83). The group’s president, H. Scott Phelps, said that both were flat from previous years.

“Fairfield does edge out most of the state in terms of occupancy,” Phelps said.

The picture will of course be affected by General Electric’s exit from the town of Fairfield and potentially by fallout from Marriott International’s acquisition of Stamford-based Starwood Hotels & Resorts Worldwide, expected to be completed by year’s end.

“The exit of General Electric has resulted in a slow, gradual decline” in business at the Stamford Marriott Hotel & Spa, according to General Manager Ron Antonucci. Revenues and occupancy at the largest hotel in the county, with 508 rooms and 20 meeting rooms, have been “pretty close to flat to the prior year,” he said.

Nevertheless, Antonucci said the hotel views 2015 “as a baseline for us, one where we’ll start to go in the right direction.” The reasoning for that expectation is confidence that “The local and state government will find solutions to replace GE … not necessarily one company of that size, but maybe with a group of smaller companies.”

As for the impact of the Marriott/Starwood deal, Antonucci said it’s very much a wait-and-see situation. “We don’t know what properties they’ll end up spinning off or selling off,” he said, “so we don’t know what the potential impact will be.”

Phelps said the CTCSB, led by its Director of Sales Jeffrey Musumano, is in the process of leveraging its contacts in New York City to show off what Fairfield County in general, and Stamford in particular, can offer. On Sept. 22, the CTCSB will host a group from the New York-based James Beard Foundation to explore holding its events in Stamford.

Phelps said “Stamford is like another borough of New York City” is the message the group hopes to send.

Not all observers are so sure that such a message will resonate.

“Traffic is a big problem for Manhattan-ites when deciding between Fairfield and Westchester,” said Anne R. Lloyd-Jones, senior managing director at consulting firm HVS. “Hotel guests don’t want to deal with the headaches of (Interstate) 287 or the Merritt (Parkway) any more than the residents do.”

Lloyd-Jones said that there has been a greater migration to Westchester from Manhattan for businesses looking for cheaper alternative sites for company retreats, meetings or simply accommodating visiting employees and clients. At the same time, Manhattan has seen a “phenomenal” increase in hotel rooms over the past few years, she said: In 2007, there were 66,000 rooms available compared with 89,200 at the end of 2015, with another 15,000 expected to be added by the end of 2018.

However, Lloyd-Jones said, occupancy rates have remained essentially the same — 85 percent in 2007 and 86 percent in 2015 — while the ADR actually decreased during that period from $297 to $287.

With more travelers seeking to save money by booking rooms at limited- or select-service, rather than full-service, hotels, the area is seeing an increase of names such as Hampton Inn and Holiday Inn Express, she said. As a result, the southern part of Westchester has been able to draw business from the Bronx (“a notoriously underserved market” in terms of nationally recognized brands), with the eastern and western parts of the county also benefiting by opening limited- and select-service hotels.

Not that full-service locations can’t continue to thrive as well. Joe Santore, vice president and general manager at privately held lodging management company Destination Hotels and general manager at Tarrytown House Estate & Conference Center, said businesses and individuals alike are increasingly availing themselves of extra amenities, from additional food and beverage services to longer stays.

“We’re having our best year since 2008,” Santore said. “We’re performing well against the market, and customers are enhancing their stays with us.” He further estimated that Tarrytown House business is up around 18 percent over the past four years.

As for Fairfield, Lloyd-Jones said its overall demographics could help boost hotel revenue in under-acknowledged ways. “It’s a fairly affluent area, so you see a lot of visiting friends and family taking a hotel room instead of staying at someone’s home,” she said. “If your kitchen is being renovated, you might just check into a hotel during those days or even weeks when the most critical work is being done. It’s viewed as a reasonable option, and has been a sustained market there kind of forever.”

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