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Hoteliers upbeat despite economy, competition

Six new hotels opened their doors in Dauphin County in 2009, a year
that some have described as one of the worst in the history of the
travel industry.

Six new hotels opened their doors in Dauphin County in 2009, a year that some have described as one of the worst in the history of the travel industry.

Although the additions increased competition, established hoteliers said they remain optimistic.

The number of available hotel room nights in the county grew by almost 6 percent last year while demand dropped about 5 percent, according to Smith Travel Research data provided by Young Strategies Inc.

Last year’s market conditions were described as a “unique, one-time blip” by Berkeley Young, president of North Carolina-based Young Strategies. And even though last year was tough, Dauphin County hotels outperformed the nation and the area has successfully weathered the economic storm, he said.

The county’s occupancy rate was nearly 57 percent in 2009, beating the nation’s occupancy rate of about 55 percent, according to Smith Travel Research.

In other U.S. markets, developers last year pulled the plug on the planning and construction of some hotels, Young said. The fact that the hotels planned for Dauphin County actually opened last year is significant, Young said.

“I can assure you of one thing: Hotel chains do not build hotels to lose money and they don’t go into a market that can’t bear it. They are very sophisticated in making those decisions,” he said. “By all the statistics, your market could bear the hotels or they wouldn’t have opened them.”

Occupancy rates should return to normal quickly for Dauphin County despite the additional rooms, especially because the economy is beginning to rebound, he said.

“I’m a firm believer that competition is always a good thing,” Young said. “While it’s not ideal to open hotels in a down economy, you just can’t stop midstream. … You’re now right in position for when this thing starts turning around this year.”

Anytime a new hotel opens, established hotels will feel the pinch of a drop in demand, said Tara Betz, general manager of the Comfort Inn Riverfront and chairwoman of the Hershey Harrisburg Regional Visitors Bureau.

“Anytime you put a new product in a hotel market, it’s going to hurt you. They’re brand new. I’m not. Have we felt it? Absolutely,” Betz said. “(But) it’s full circle. We’re going to bounce back. This region as a whole is going to bounce back.”

But not all of the Comfort Inn Riverfront’s recent occupancy decline is attributable to the new hotels, she said. The travel and lodging industry has been turned upside down within the past five years in terms of how hotels market themselves, she said.

“The Internet has put a whole new spin on how we sell hotel rooms and how the consumer buys hotel rooms,” Betz said. “(All) the public information that’s out there (has) changed the way we do business. We work harder and we work smarter.”

Since the six hotels that opened last year were primarily limited-service properties, they were not filling a gap in the county’s existing hotel base, Betz said. A number of limited-service hotels already existed, including the Comfort Inn Riverfront, she said. Limited-service properties are hotels without extensive meeting and convention space and extra amenities.

Plans for Staybridge Suites Harrisburg were in the works for nearly three years before it opened in April 2009 at 920 Wildwood Park Drive in Harrisburg, said Cory Floyd, the hotel’s general manager.

Floyd said Staybridge Suites had an advantage amid the economic slump by being close to the Pennsylvania Farm Show Complex and Expo Center. That being said, the hotel did more bartering with its room rates than it would have liked to last year, he said. The Internet makes it easier for travelers to discover the difference in rates between neighboring hotels, which can help them get a lower price.

The hotel’s standard rates are between $129 and $139 per night, but bartered rates were closer to $110 each night, he said. The hotel agreed to lower rates because it was new to the market and wanted to get guests in the door, he said.

“It was a little bit of a challenge because travel and tourism is down as a whole,” Floyd said. “Because of the recession … those who travel (have become) more educated, and they (have) realize that they can barter between hotels to get the best deal.”

The average daily room rates also have been affected over the past few years as more room nights have been added to the county, he said. And the market conditions last year didn’t help the rates either, he said. Staybridge Suites Harrisburg is back on track for 2010, however, with competitive rates that Floyd said are where they should be.

Any disparity between the county’s lodging supply and demand should work itself out as the overall travel market rebounds, said Rick Dunlap, spokesman for the visitors bureau. The addition of table games to the Hollywood Casino at Penn National Race Course should help the situation, as well, he said.

“If anything, we are well positioned for when the full recovery comes,” he said.

Hotel room supply and demand

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