Business travel boosts CT hotel industry

Contributed renderings & photo The Hartford Marriott Downtown (left), The Hartford Residence Inn Downtown (above, top) and The Hilton Hartford (above) are a few of the Connecticut hotels seeing a boost in occupancy and rates thanks to a rebounding business travel market.

Brien Fox, vice president of sales, Waterford Hotel Group

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By Karen Sackowitz

Connecticut hotels are beginning to rebound from the depths of the recession, as an increase in business travel is boosting occupancy levels and allowing hotels to charge more per room.

The average hotel occupancy rate in Connecticut hit 60 percent at the end of April, the highest rate that month has seen since 2008.

Meanwhile, the average daily room rate in Connecticut shot up to $104.65 in April, a level also not seen since 2008, which marked the beginning of the financial crisis that wreaked havoc on the business travel industry.

Hotel officials, however, say they are still only cautiously optimistic about the industry's performance.

The improving numbers are a good sign, they say, but also represent a correction that has been long overdue.

"Following the recession, the hotel industry gave back quite a bit in rate," said Brien Fox, vice president of sales for the Waterford Hotel Group. "So while we are seeing improvements over the last year, as rates increase, they will actually be returning to 2007 levels."

Waterford Hotel Group oversees three properties in the downtown Hartford area — the Hilton Hartford, Hartford Marriott Downtown, and the Hartford Residence Inn Downtown — plus the Sheraton Hartford Hotel at Bradley Airport. Fox said that as a business travel market, Hartford is seeing stronger gains in mid-week bookings.

As overall occupancy numbers climb, he adds, rates are beginning to follow.

"As the economy improves, we are seeing a willingness on the part of businesses to have employees travel more," he said. "That improvement then translates into less rate resistance — a willingness to pay more."

Michael Van Parys, president of the Connecticut Convention & Sports Bureau, said he sees group travel on the rise in Hartford. He said meeting requests are up from both regional and national organizations.

"The economy always takes longer to react in Connecticut, but we are seeing that things are coming back," Van Parys said. "If the trends continue upward, it's wonderful news for everyone. It means more money for the hotels, more tax money for the state, and more jobs for the hospitality industry."

According to the latest statistics reported by PKF Consulting in Boston, the positive trend is expected to continue into next year. By the end of fiscal 2013, occupancy rates in the Hartford market are expected to reach 58 percent, a 2.6 percent gain over 2012.

Meanwhile, the average daily rate (ADR) for the same period is projected to be $102.78, a 3.6 percent increase over 2012. Looking ahead to 2014, PKF's numbers show a projected occupancy rate of 59.5 percent, with ADR at $106.87.

"In terms of what is bringing the 2013 numbers up, it's simple," said Andrea Foster, a vice president at PKF. "The 2012 numbers were impacted by two factors — lesser convention activity, and Hurricane Sandy."

The October 2012 storm definitely had an impact on the hotel industry, experts say, but for different reasons in different regions. In Hartford, hotels took a hit as highways were shut down and events were canceled.

In outer lying areas, though, it was a different story.

"The negative impact was felt less on the coast, where storm damage required utility crews to stay in the area, and where people displaced from their homes needed places to stay," said Fox.

Foster said that in general, lower-end properties — or less expensive hotels — will show better numbers related to storm activity because of work crews being dispatched to hunker down ahead of the weather.

More expensive hotels, she said, benefit from business travel.

"In terms of higher-end properties in the Hartford metropolitan area, generally speaking, 2012-2013 reached a peak occupancy rate in the mid-60 percent range and an ADR of $130," she said. "In lower-end properties, those numbers were closer to the low-50 percent and ADR of $70."

Foster said that different regions within the state bounce back at different rates as well.

"In areas like Mystic and Norwich, which are more seasonal, numbers have rebounded to the highs of 2008, with occupancy rates in the mid-60 percent range," she said. "While in areas like Danbury and southwestern Connecticut, a more corporate market, occupancy numbers haven't rebounded since 2007."

While Connecticut's hotel industry appears to be stabilizing, there are several factors that could impact performance in the next few years, Foster said. Planned casino projects in Massachusetts slotted for 2014, for example, will most likely have an adverse impact on Connecticut's numbers.

But for now, with the major February 2013 storm already figured into the current hotel data, things are looking good for the remainder of the year and for 2014, said Ginny Kozlowski, executive director of the Connecticut Lodging Association.

Some of the recent uptick, Kozlowski added, can also be attributed to an increase in investment in hotel properties.

"Statewide, we are seeing activity like the Omni New Haven Hotel at Yale undergoing a refresh, and a new building being constructed at Harbor Point in Stamford," she said. "These projects are designed to offer a great visitor experience, which in turn allows the hotels to regain market share."

Kozlowski said that as the economy improves, consumer confidence follows, which will boost leisure travel numbers. And as area companies continue to show positive growth, business travel numbers should also climb.

"It's all intertwined," Kozlowski said. "As the economy does better, we all do better."

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