Valley hotels overall show a major boost in business in September, with both occupancy — the percent of available rooms actually filled — and average daily rate racking up big increases, U.S. lodging industry trackers Smith Travel Research reports.
In fact, the Valley did three times better than the country as a whole, according to Smith Travel. But East Valley hoteliers say they aren’t raking in the big bucks the report seems to indicate.
Revenue per available room — generally considered the most accurate measure of hotel’s performance — soared 9.1 percent for Valley hotels in September compared with September 2002, according to Smith Travel.
The bulk of the Valley boom is in average daily rate — up 6.1 percent from September 2003. For the first nine months of the year room revenue is up 3.3 percent locally, while U.S. hotels overall still sagged 0.8 percent behind the previous year.
“We’ve had the biggest September we’ve had in years occupancy-wise, but we did it by sacrificing rate,” said Sherry Henry, general manager of the Fiesta Inn in Tempe. At the Chaparral Suites Hotel in Scottsdale, year-to-date occupancy is up about 5 percent, but average daily rate is down 3.5 percent, general manager Tom Silverman said. He said fellow hoteliers tell him similar stories.
“It’s a good sign that occupancies are rising,” Silverman said. “But average daily rate is still behind.”
Three upscale resorts that opened in late 2002 adding nearly 2,200 new high-priced rooms to the mix could have raised the average daily rate base for the Phoenix area, said Chris Kenney, marketing director for the Tempe Mission Palms Hotel. The new resorts boosted Valley hotel inventory by more than 4 percent to about 50,000 rooms. Kenney said he’s happy to be able to grow business despite the increased guest options, but his hotel’s average daily rate isn’t making giant leaps.
“More encouraging to us is that occupancy is starting to climb,” Kenney said. “As we look to see if we’re getting back to more normal numbers, we find we are still behind, but the trend line is positive.”
Four Seasons Scottsdale marketing director Greg Hanss said reservation requests are heating up at the property, but he is “still under the high-pressure rate of the current economy,” in booking the business.
“It’s encouraging, but not a trend until you put a few months together,” Hanss said. “And it’s up and down right now.”
Henry said the Tempe Convention and Visitors Bureau analysis also indicates a roller coaster effect.
Tempe hotels experienced a 6.4 percent increase in room revenue — more than half of that due to average daily rate increases — in September, she said. “But for the two previous months, rate was down,” she said. “Rates are still extraordinarily negotiable,” Henry said. “We use 1999-2000 as the benchmark, and we are still not back up there. It’s a shame that it’s three years later and we are still shooting for that.”
Valley hotel consultant Francis Kercheval said before uncorking the champagne to toast the past month’s performance, it’s important to remember that nearly anything looks good compared with a dismal 2002.
“The bottom line is we are still not where the industry has been, but the good news is we might have bottomed out,” Kercheval said. “What will really tell the tale is how the (winter) season is. ”
Kercheval said he’s optimistic.