News for the Hospitality Executive
|By Gary T. Pakulski, The Blade, Toledo, Ohio
Knight Ridder/Tribune Business News
Dec. 14, 2003 - As the Christmas holidays approach in the Toledo area, there is plenty of room at the inn.
Indicators suggest that 2003 has been another down year for the local lodging industry, which has been hurt by a sputtering economy, belt-tightening at Toledo corporations, and attempts to absorb hundreds of rooms added in a building boom that began in the 1990s and continues today.
"Most of us have been down the past three years, and this is the worst year," complained Ken MacLaren, managing partner of the Clarion Hotel, Westgate, and five other hotels in Ohio and Florida.
Room rentals at metro Toledo establishments brought in $2.7 million less through Oct. 31 than the $82.3 million taken in at the same time in the peak year of 2000, according to a leading industry research firm.
Occupancy rates in the Toledo area have been flat or have slipped for three years, said the firm, Smith Travel Research, of Hendersonville, Tenn.
The average hotel/motel room in greater Toledo was rented 54 percent of the time in 2002, which was significantly below the national occupancy average of 59 percent.
Through Oct. 31, occupancy rates locally were on track to fall below last year's. They peaked locally in 1999 at 59 percent.
Other data also point to lower revenues.
Lucas County took in $3.2 million from its 8 percent room tax through Oct. 31.
That was about $100,000 less than at the same time in 2002, according to records at the county's office of management and budget.
Three hotels are at least two months behind in paying the tax, county officials confirmed.
Meanwhile, the number of lodging establishments skyrocketed the past decade. Telephone directories list 46 major hotels, an increase of 42 percent since 1992.
In the last two years alone, at least four hotels with 300 rooms have opened, boosting the number of "convention quality" rooms 6 percent to 5,500, according to the Greater Toledo Convention and Visitors Bureau.
And the construction apparently isn't over.
Developers have received approval to build a 50-room Hampton Inn & Suites on Helen Drive in Perrysburg Township, said zoning inspector Grant Garn.
Developers couldn't be reached for comment. But an official of a nearby Day's Inn isn't happy about the possibility of yet another hotel at the Exit 193 interchange of I-75.
The existing five hotels there continue to suffer from reduced business and leisure travel, including fewer Canadians headed to Florida for the winter, said Art Balderas, hotel controller.
The travelers either are driving farther before stopping for the night or are forgoing the annual trek, he speculated.
Toledo area hotels face not only increased competition but also stagnant prices.
The average room rate has risen just $4 over the last five years to $61, which is more than $20 below the national average, Smith Travel Research said.
"There is always a rate war going on," said Jim Donnelly, president of the Greater Toledo Convention and Visitors Bureau.
Mr. Donnelly said the local lodging industry has been battered by weak economic conditions, the attacks of Sept. 11, 2001, and lower attendance at conventions drawn to the area.
But he expressed hope for a turnaround in 2004.
Darrell Ducat, owner of seven hotels in Toledo and Florida, said the aim of investors fueling the building boom is to "drive the other guy out."
In metro Toledo, two of his hotels are thriving but two others struggle.
Sales at his Comfort Inn East and Sleep Inn & Suites, both in Oregon, are higher than last year's, with occupancy at the Sleep Inn -- the more popular of the two -- near 70 percent.
Meanwhile, average occupancy at Mr. Ducat's 102-room Quality Hotel and 147-room Econo Lodge properties on Reynolds Road in southwest Toledo is barely above 40 percent.
"We're just making the payments," he said.
"It's a tough area," he added, noting that the properties are surrounding by nine competing motels.
"I don't know what's going to bring the hotel business back in Toledo," he said. "I think there are going to be some guys that go under."
Ken MacLaren, on the other hand, may be the ultimate optimist.
Despite concerns about the local lodging industry, he and his partners opened a 72-room Wingate Inn and Suites on Main Street in downtown Sylvania in May.
"It's a little niche," he explained. "There's not a big market but there is a market for a small property like that. There was nothing out there.
"We're not making a profit yet, but we think we will next year."
The hotel caters to business travelers and out-of-towners attending family gatherings in the upscale suburb, said Jennifer Logsdon, general manager.
In contrast, at Mr. MacLaren's 300-room Clarion Hotel in Toledo's Westgate area, "We're getting hit," he said. "Our food and beverage is up. But our room revenue is down. We've lost more this year than in 2001 and 2002" when the slide began, he said.
Part of the problem is travel reductions at Toledo's three Fortune 500 companies, Dana Corp., Owens-Illinois Inc., and Owens Corning, the innkeeper said.
OC is operating under Chapter 11 bankruptcy protection. Dana and O-I are waging campaigns to cut costs and reduce debts in an effort to lift their bond ratings out of the "junk" category and make themselves more attractive to investors.
Some lodging-industry executives expressed hope that hotels will get a boost from Dana's new $39 million technology center in Monclova Township, which could bring additional customers and employees of the firm to the area.
Mr. MacLaren hopes for improvements in 2004 but is circumspect.
"I've been in Toledo since 1961 and I don't see a lot more people coming here," he said.
"We're not a growing market so we're all sharing the same pie. Everybody is getting a little less."
-----To see more of The Blade, or to subscribe to the newspaper, go to http://www.toledoblade.com
(c) 2003, The Blade, Toledo, Ohio. Distributed by Knight Ridder/Tribune Business News. DCN, OI, OWENQ,