Last month, Davidson Hotel Co. completed a $20 million upgrade of the Holiday Inn Stamford Downtown, typically a busy host of business meetings.
This holiday season, it is anything but business as usual at Fairfield County hotels.
The occupancy rate in Fairfield County lodgings plunged 14 percent in October from a year earlier, according to data from Smith Travel Research Inc., as hoteliers brace themselves for a down December and first quarter, traditionally the leanest season of the year.
While Fairfield County occupancy rates are only slightly below those in Connecticut as a whole, the county”™s hotels have had a noticeably steeper drop in the past year than their counterparts in other parts of the state.
The drop in business cost local hotels $3.5 million in October alone; for the year, sales are off $11 million from the first 10 months of 2007, but still ahead of equivalent totals in 2005 and 2006 ”“ perhaps an incredible achievement given the state of the economy.
Based in Hendersonville, Tenn., Smith Travel Research Inc. (STR) tracks bookings at more than 36,000 hotels internationally with in excess of 5 million rooms, including some 8,300 rooms at hotels in Fairfield County.
For the first time in five years, the average daily room rate at U.S. hotels dropped in October compared to a year earlier, STR reported, falling a half-percentage point to under $108. That broke a 63-month streak of price increases dating back to June 2003, when prices dropped 0.8 percent from the previous June.
Not all markets suffered; after New Orleans and Houston, whose hotel figures were skewed by the recovery from Hurricane Katrina in 2005, hoteliers in the San Francisco region enjoyed the third biggest boost in business in October of any nationally, with occupancy up 1.5 percent and average room revenue up nearly 8 percent.
Fairfield County hotels had already experienced a year-over-year decline last May in their average daily room rate, a drop of 0.2 percent. However, hotels bounced back in the traditionally strong wedding month of June to post their highest rate in years at more than $124 on average per room.
While the October rate dropped by 0.4 percent, hotels were still able to charge their sixth best rate on average since at least 2004. STR sees maintaining room rates during a recession as key to the long-term viability of lodgings.
“We hope hoteliers learned their lessons during the post-9/11 time period that cutting rates in the short term only provides slight immediate help,” said Jan Freitag, STR vice president of global development, in a prepared statement following the company”™s October report. “It took the industry more than five years to recover from the price discounting that took place during late 2001 and the first half of 2002.”
On the old adage that one must spend money to make money, renovations such as the Holiday Inn Stamford Downtown are one means by which hotels can maintain occupancy rates and pricing levels.
“What we have is essentially a brand new hotel within the walls of an existing building,” said Mike Bennett, general manager of the hotel, in prepared comments last month. “There is almost no resemblance to our old facility.”
Hotels are expected to continue price promotions in the current soft market, according to a fall survey by the National Business Travelers Association, but travel planners stated they expect hotels to attempt to recoup some revenue through increased use of fees.
