Monday, August 17, 2009
Hotel, convention business suffers effects of economic uncertainties, swine flu scare
By Copyright © 2009 Albuquerque Journal By Rivkela Brodsky
Journal Staff Writer
It was a very bad year for the Albuquerque Convention and Visitors Bureau thanks to the double dose of trouble from the recession and swine flu scare.
The hotel business directly tied to the Convention Center plummeted more than 40 percent over the 2009 fiscal year, which ended June 30.
The bureau booked 57,837 room nights for Convention Center meetings or events last year but saw those numbers free-fall to 34,174 room nights in 2009 — just 60 percent of its sales goal.
Bureau officials were quick to point out that convention center numbers in 2008 were slightly better than a normal year because of the impact of the U.S. Bowling Conference, which brought in thousands of people and took place from January through June of last year.
"One of the things to note, (occupancy) was going to be most likely down no matter what. Losing the Bowling Conference, you don't get those every year," said Dale Lockett, president and CEO of the bureau.
He and Tania Armenta, vice president of tourism and communications for the bureau, sat down with the Journal recently to go over the bureau's annual report for the 2009 fiscal year.
In addition to the recession, the H1N1 virus contributed to the decline of business and room nights, Lockett said.
"Yes, we've been hit by the recession. The industry has been hit overall, but we're doing fairly well compared," he said.
Non-Convention Center bookings, or meetings or events not involving that venue, dropped just 2.3 percent over the fiscal year, although sports booking were down almost 19 percent for the same period.
The bureau was able to land the USA Track & Field indoor championships next spring through 2012, booking almost 2,000 room nights and bringing in about 1,500 people for at least the first year.
The overall lower occupancy numbers also reveal increased competition for convention and meetings business, Lockett said.
"We're going to be challenged until the need for an (much larger) event center is realized," he told the Journal. "The competition has a better product for convention centers. The impact is more than just dollars and cents, it's who's coming in. It's business people, it's buyers."
Charlie Gray, executive director of the Greater Albuquerque Innkeepers Association, said a lack of availability at Downtown hotels hurts Convention Center bookings. He said there are about 400 to 450 rooms available between Downtown hotels on any given night — not enough to house a large convention in one area.
"If there was more availability Downtown, the ACVB would have the tools to work with," he told the Journal.
He said an event center and hotel complex would make it so the city could compete for convention and meetings business. Many other cities have facilities or hotels that house 2,000 people under one roof, he said.
"I think it would get us into the game," he said. "Right now, in a lot of cases, we're on the sidelines watching the parade go by."
Lodging numbers show a similar trend of decline for Albuquerque.
According to the national Smith Travel Report, which measures hotel business in many cities and states, the Duke City:
• Had a 53.8 percent occupancy rate for the first five months of 2009 — down 15.2 percent from the same time period in 2008. The city had a 63.5 percent occupancy rate for January through May of 2008.
• Is below the 56 percent average occupancy rate for what is called its competitive set — which includes Salt Lake City, Tucson, Austin, Charlotte, Little Rock, Denver, Phoenix, Portland, Oklahoma City and Arlington, Va. The average for the set of cities is a 13.8 percent drop from 2008.
• Is slightly above the average occupancy rate for the U.S. at 53.3 percent — the U.S. average having dropped 11.2 percent from 2008.
• Has had an average daily room rate for the first five months of 2009 at $71.31, down 3.7 percent from the same time period in 2008. The revenue per available room dropped 18.4 percent from 2008.
Decreased convention and meeting bookings also has meant less revenue from the city's 5 percent lodgers tax which provides about three quarters of the funding for the Albuquerque Convention and Visitors Bureau.
The ACVB had a $9.1 million budget in fiscal year 2008 (with help from U.S. Bowling Conference revenue), dropping to $7.5 million in fiscal year 2009 and has planned a $6.8 million budget for fiscal year 2010.
The lodgers tax provided $5.4 million to the bureau for 2008, $4.8 million in 2009 and the bureau is expecting $4.6 million in lodgers tax revenue this year.
"This year our budget is approximately $1 million less than it was," Armenta said.
The bureau has a contract through the city that is currently on a month-to-month basis until a new contract is negotiated this fall.
The bureau recently revisited its Destination Master Plan, having discussions with those in the hospitality industry as well as Bob Harvey and Diane Kelsay, both with Egret Communications, a company that consulted with the bureau on its plan when it was written in 2006. The plan was compiled by different groups in the industry to market the city.
Harvey pointed out that most of the city's tourism business is leisure-based — at 80 percent — with convention and meetings business making up the rest.
Even so, Lockett said the key to coming out of the recession is a continued focus on booking conventions and meetings, which doesn't mean forgetting about destination marketing.
One of the main goals of the updated Destination Master Plan includes work on getting the Convention Center transformed into an event center/hotel-and-retail project.
There has been a renewed push for such a convention center transformation from city officials and those in the hospitality industry.
"I'm a firm believer that meetings are a way out of the recession," he said. "But I'm also a huge advocate of the educational value of travel. You gain a new understanding of people and economies."
The Rail Runner, the opening of the Andaluz Hotel this fall and upgrades to the Sheraton Uptown and the Doubletree Hotel may increase numbers for the next fiscal year, Lockett said.
Summer lodging information may also help boost occupancy rates for the rest of 2009, Armenta said.