Occupancy rates steadier as hotel construction slows

by Karen E. Culp

SBJ Staff

Springfield filled its available hotel rooms at a better rate in 1998 than in 1997, according to figures released from the Springfield Convention and Visitors Bureau.

In 1998, hoteliers rented 1,058,811 room nights, as opposed to 974,449 in 1997, an increase of 8.7 percent, said Tracy Kimberlin, executive director of the CVB.

"Occupied rooms grew at a pretty good clip for 1998. We saw a growth in demand for those rooms and therefore a significant increase in occupancy," Kimberlin said.

The number of room nights available in the city increased by 6.2 percent, from 1,831,870 in 1997 to 1,945,366 in 1998, the result of a few new hotels opening up during the year.

"What we had was a number of hotels that were built toward the very end of 1997 and those hotels did not show up significantly in our calculations until 1998 as a result," Kimberlin said.

The percentage of occupancy in Springfield continues to be lower than it needs to be, Kimberlin said, and was only at 54.4 percent for 1998, up slightly more than a percentage point from 1997's 53.2 percent occupancy rate.

"We would like to be at 65 percent. When you have less than 65 percent occupancy, hotels are running a pretty tight ship and having a difficult time making money," Kimberlin said.

The low occupancy rate makes it tough for hotels, but they can get by on the 53 percent rate, said Jeff Hamby, of the Ramada Limited.

"Though occupancies have dropped, hotels can get by on 53 to 55 percent occupancies, but if you add a couple more hotels, they take a little more slice of that pie. What will help for us is if the community comes together to build the tourism. I think we see that starting to happen," Hamby said.

Springfield still has too many hotels, but there has been a slowdown in the construction of new lodgings. The only hotels scheduled to be built in 1999 are a Howard Johnson's on South Campbell Avenue and a Courtyard by Marriott, to be built by one of John Q. Hammons' companies near the airport. The Sleep Inn plans an addition to its existing facility, but no other expansions are planned, Kimberlin said.

"It could stay that way. I don't anticipate that there will be a lot of rooms added to our total in 1999," Kimberlin said.

Of the hotels in the market, those that "seem to be doing the best are the upscale or full-service hotels," Kimberlin said.

Craig Cremer of the Drury Inn, agreed, "The hotels in the mid- to upper-price range seem to be having better success than those at the lower end," he said.

"There are a lot of limited-service properties that are doing well, also. The ones that are suffering are the older properties that are not affiliated with a major chain," Kimberlin said.

Those properties could begin to upgrade or change their affiliation or ownership in 1999, Kimberlin said.

"Particularly as we see the (fish and wildlife) museum being built and a number of the projects coming online as a result of the room-tax increase, we will see those properties upgrading as demand for hotel rooms increases," he said.

Though the full-service hotels are performing well in the market, the last full-service property was built in 1985. The Holiday Inn North was the last full-service hotel to enter the market, Kimberlin said.

In April 1998, the city began collecting a voter-approved room tax increase. The tax was at 2 percent, but rose to 4 percent with the increase.

Local hoteliers said the increase has had a negligible effect on their business.

"In our business, which is one of the higher-end hotels, we are hearing no mention of it at all, or if we do, it's in a positive vein in terms of what the city is planning to do with the extra collection," said Gary Blakenship of the Walnut Street Inn.

Randy Roelofsz, who is president of the Springfield Hotel/Motel Association and general manager of the University Plaza Holiday Inn, said that Springfield is just now "in parity with not only the major cities, but also with the secondary and tertiary markets" with regard to the amount of room tax it collects.

"Most big convention cities are at that rate and above," Roelofsz said. The hotel/motel association meets monthly and is working to enhance the hotel market, as well as increase the number of visitors to the area, Roelofsz said.

Room tax collection saw "very good increases" in 1998, Kimberlin said. The increases calculated are in the original 2 percent tax; the additional tax collection that began in April is not yet considered.

The first quarter of 1998 saw an 18.7 percent increase over the same period in 1997 in collection of the 2 percent tax. The second quarter's increase, 1998 over 1997, was 17.8 percent, while the third quarter had an 11.5 percent increase over 1997's third quarter. The fourth-quarter number has not yet been tallied, Kimberlin said, but he added that he expects it to be around a 10 percent increase over 1997.

"The room tax increase is a factor of both the increase in demand and in the cost for those rooms. In a lot of cases the cost for rooms increased," Kimberlin said.

The average daily rate for a room in 1998 rose 20 cents, from $47.57 in 1997 to $47.77 in 1998. That rate is still low compared to other cities, Kimberlin said.

Tourism should increase in 1999 as a result of the Miss USA broadcast and additional advertising, Kimberlin said. The CVB is spending more than $550,000 on cable television advertising this tourism season to attract people to the Ozarks, he added. Two large groups will come to town in the summer of 1999: the Gold Wing Road Riders Association and a girl's AAU tournament.

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