Greater Hartford's hospitality industry continues slow, but steady comeback

Photo | Contributed Rocky Hill's Hampton Inn & Suites hotel is operated by Lotus Hospitality Inc.

The lobby of Rocky Hill’s $7 million Hampton Inn & Suites features a modern look and refreshment area.

A guest room at the new Courtyard by Marriott in Southington. The 125-room hotel, owned by AVA Realty Southington, opened Nov. 13.

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By Joe Cooper

After four months in operation, the overseer of Rocky Hill's Hampton Inn & Suites by Hilton says his company's new 90-room hotel is outperforming several occupancy projections.

Gary Desai, president of Lotus Hospitality Inc., which operates five Connecticut hotels, says his firm's new 58,000-square-foot lodging facility at 685 Cromwell Ave., is benefiting from Rocky Hill's growing downtown, which has an abundance of office, corporate and distribution space.

But much of the early success, he says, is being driven by unmet demand in Greater Hartford's lodging sector, where Lotus identified a lack of quality hotels in the upper-middle market south of Hartford, he said.

Hampton Inn's experience mirrors what's been a relatively healthy Greater Hartford hotel sector in recent years. In fact, since the depths of the Great Recession, Hartford region hotels have steadily recovered, annually booking higher occupancy rates and more revenue per available room.

Competitive room rates, a slow, but consistent economic recovery and a concentration of tourist attractions statewide have helped boost the region's hospitality sector, industry experts say.

Still, challenges remain, especially in downtown Hartford, where major entertainment venues, like XL Center and the Connecticut Convention Center — which hotels rely on to attract visitors — face an increasingly competitive landscape and have lost shows to nearby venues, although the short-term outlook is trending upward, officials said.

Since 2012, Hartford region hotels' average occupancy rates have increased 11 percent, while average daily room rates and revenue per available room have climbed 18 percent and 30 percent, respectively, according to market data firm STR. Hotels through August this year are booking about 63 percent of their rooms every night, while the average daily room rate and revenue per available room have grown to $115.97 and $72.59, respectively. By comparison, the average U.S. hotel occupancy rate was 66.7 percent at the end of September, according to CoStar Portfolio Strategy.

Meantime, revenues from Greater Hartford's 135 hotels jumped 23.1 percent from $265.4 million in 2012 to almost $327 million in 2017, STR data shows.

Lotus, Desai says, has fully recovered from the Great Recession as healthier state and national economies have helped increase leisure travel.

He believes there are enough rooms in downtown and Greater Hartford to meet current demand, and is optimistic the region will continue to experience “moderate” growth in the year ahead.

But as far as entertainment goes, Desai views Mohegan Sun's new $80 million convention center as a major threat to Hartford for convention business. That could hurt regional hotel stays as well.

“Hartford has made great strides recently and would need to continue to grow and shape itself into a destination city that hosts larger entertainment events and conventions regularly, in order to support any substantial growth in hotel room supply,” he said.

Aside from a significant decline in statewide funding for tourism marketing, the local lodging sector has many assets in its favor, said Ginny Kozlowski, executive director of the Connecticut Lodging Association, which provides advocacy and educational services to some of the state's 400 hotels.

Competitive room rates, Kozlowski said, is one of the main reasons for the region's lodging growth. A recent study by BostonHotels.org found Hartford hotels had New England's lowest average room rate in August at $109 per night. Hotel operators are able to offer lower rates because Connecticut facilities often house less meeting and banquet space, she said, which reduces overhead costs.

Meantime, the state and Greater Hartford have a concentration of tourist attractions: Highly regarded golf courses; a growing brewery industry; numerous historical and cultural attractions; and other activities along the Connecticut River.

“We have these historical assets that people across the country do not have,” Kozlowski said.

Key to economy

A healthy lodging sector in Connecticut is crucial for the state's economy and budget. There are about 400 hotel properties in Connecticut that generate billions of dollars in annual guest spending.

The state generated almost $130 million from its 8.65 percent hotel room occupancy tax in fiscal year 2017-18, which was 11.5 percent higher than it recorded in 2014-15, according to the Connecticut Department of Revenue Services.

And hospitality jobs have also rebounded since 2010, according to the state Department of Labor. The industry employs around 11,900 people today, up from 10,900 people eight years ago.

The future jobs outlook is also promising. The Labor Department expects the industry to reach a more than 25-year employment high in 2026 with 12,534 projected jobs. That would mark a 7.5 percent increase vs. 2016.

In total, hotel room sales statewide in 2017 generated $4.4 billion in guest spending on hotels, local businesses and transportation, according to the Connecticut Lodging Association.

Marketing Connecticut

The success of hotels, especially in the Hartford area, is dependent in part on expo venues such as the Connecticut Convention Center, which attracts tens of thousands of travelers annually to some of the region's 13,400 rooms.

The Convention Center, overlooking the Connecticut River and anchoring downtown Hartford's Front Street entertainment district, generates between 30,000 to 39,000 room nights a year through about 160 events.

Mike Costelli, the Convention Center's general manager, said the venue's booking policies prioritize convention meetings and trade shows during weekends to help bolster local hotels, which sell more rooms on weekdays.

And despite the recent losses of the Hartford Boat Show and Connecticut International Auto Show to Mohegan Sun's convention center, Costelli says his venue will replace the lost shows no later than 2020.

“It provides another opportunity for us to fill that space with a different show,” said Costelli, adding the shows move to Mohegan is a net plus for Connecticut's economy. “Now you have two pieces of business. It ends up being a win-win for the state.”

The Capital Region Development Authority (CRDA), which oversees several Greater Hartford entertainment venues, has said Connecticut's new 10 percent admissions tax, which takes profits away from promoters, is making it harder for the aging XL Center to lure major events.

But Michael Freimuth, CRDA's executive director, said the event load has grown this year for both the XL Center and Convention Center. The future short-term outlook is also trending upward, he said.

In 2019, the XL Center is hosting the first and second rounds of the NCAA Division I men's basketball tournament from March 21-23. The weekend event has already spurred a “significant” amount of hotel bookings, Freimuth said.

Months later, CRDA-managed Pratt & Whitney Stadium at Rentschler Field in East Hartford will also host the NCAA Division I men's lacrosse tournament quarterfinals on May 18 and 19. Rentschler will also host the tournament's championship rounds in 2020 and 2021. Those are big wins for Rentschler, the region's lodging sector and for state tax collections, Freimuth said.

Entertainment venues overseen by CRDA last year generated $500,000 in room occupancy tax, he said.

“It will be a big use for the region and push hotel trade,” Freimuth said of the college tournaments. “We are always trying to balance events that drive hotels and restaurants in the downtown core.”