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Hotel industry worries as demand for rooms plunges

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The olive bar in the lobby of Tampa's Renaissance Hotel at International Plaza was once considered an indispensable part of the upscale hotel's Mediterranean flavor.

"A sacred cow,'' says general manager Jim Bartholomay.

But the marinated olives and Bellini bread sticks have been replaced with flavored water after a top-to-bottom review of the hotel's services and costs. Annual savings: $30,000.

From big, brand name properties to mom-and-pop operators, the hotel industry is struggling to deal with plunging demand for rooms as the economy sours. Bookings started slipping in summer, then nose-dived after Labor Day.

In Pinellas County, just 42.5 percent of hotel rooms were occupied in September — the lowest level in at least six years, according to Smith Travel Research, which tracks performance based on data provided by hotels. Hillsborough County fared only slightly better at 45.7 percent.

Hotel owners are "kind of writing off'' the year's last four months and looking ahead cautiously to 2009, said D.T. Minich, tourism director for Pinellas.

Full-service hotels that rely on business meetings have been hardest hit. Companies are sending fewer employees and spending less on them when they arrive, says Mike Falconer, marketing director for the Tampa Marriott Waterside.

"They're cutting back on the hors d'oeuvres before dinner. They may have a cash bar,'' he said. "They may go from the filet mignon to a lesser menu like chicken and pasta.''

Ditto for conventions and association meetings. Attendance of 25,000 for the Tampa Bay International Auto Show last month was down just 3 percent from last year's, said Tampa Convention Center administrator John Moors.

But spending on food and drinks was off 20 percent, in part because show organizers canceled a catered VIP reception. Anticipating fewer attendees and exhibitors — and less spending on concessions and catering — Moors cut revenue projections 11 percent for this year.

Tourist hotels are feeling the pinch, too. Business was holding up through October at Parker Manor Resort, an 18-unit hotel on the Intracoastal Waterway in Clearwater Beach. Then last month, customers canceled reservations, and walk-in traffic dried up.

"We lost half our business,'' said Dawn Marks, who owns the hotel with her husband, Bud. "It's the economy. People get nervous.'' Bookings are solid from Christmas week through April. But the couple aren't raising summer rates for 2009, the first time they've forgone an increase in eight years.

Tampa Bay area hotels haven't slashed room rates to boost sales. But some have tried other tactics.

The TradeWinds Island Resort on St. Pete Beach has used limited promotions, such as selling rooms at 50 percent off and donating $50 of that to All Children's Hospital in St. Petersburg.

Some hotels are targeting low-rate business, like government meetings and airline crews. Many have hiring freezes. TradeWinds, the area's largest resort with 785 rooms in two locations, probably won't add staff next month going into the busy spring season, said chief operating officer Keith Overton.

Most visitors don't plan spring trips to Florida until after December. So no one knows how March and April, the area's busiest months with the highest room rates, will shake out.

"That's our Christmas, when hotels make money for the year or don't,'' says Minich. "It's really, really critical.''

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

October 2008 Hotel Statistics

Occupancy rate (% change) Avg. Daily rate (% change)

U.S. 62.1% (-6.5%) $107.60 (-0.5%)

Pinellas 50.8% (-4.6%) $103.98 (+1.6%)

Hillsborough 55.2% (-10.3%) $101.77 (-1.6%)

Source: Smith Travel Research

Nationally, the October 2008 occupancy rate was 62.1 percent, a drop of 6.5 percent. The average daily rate was $107.60, a drop of .5 percent. Source: Smith Travel Research

Occupancy rate

55.2%







A drop of 10.3 percent

Average daily rate

$101.77







A drop of 1.6 percent

Occupancy rate

50.8%







A drop of 4.6 percent

Average daily rate

$103.98







Up 1.6 percent

Hotel industry worries as demand for rooms plunges 12/05/08 [Last modified: Friday, December 5, 2008 11:28pm]
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