The hotel industry nationwide continues to recover, but the Tucson market is seeing only slow gains, a national industry expert said Tuesday at an event here.
As a whole, the hotel industry has been performing very well for 46 months, said Lindsay Culbreath, senior director of business development and marketing for STR, a Tennessee-based company that tracks the hotel industry. “But, Tucson is seeing very minimal increases.”
Nationwide for the first nine months of 2014, hotels posted an 8.2 percent increase in revenue per available room — a record for a three-quarter period — while average occupancy rose 3.5 percentage points to 65.9 percent, according to STR data. In all of 2013, nationwide revenue per room rose 5.4 percent and occupancy increased 1.5 percent.
Tucson saw hotel occupancy grow just 0.7 percent in the first nine months of 2014, while revenue per room rose an average 2.2 percent and overall room revenue increased 3.4 percent.
“There were no record breakers in Tucson this year,” Culbreath said. “But, there is still positive growth.”
About 70 hotel industry professionals attended an outlook presentation hosted by Visit Tucson, the area’s visitors bureau, to hear about how the industry is performing in Tucson.
The resorts have been faring very well the past few months, said Brent DeRaad, CEO and president of Visit Tucson. “The hotels within Tucson proper have suffered a little more.”
The luxury class, which includes Ritz Carlton Dove Mountain and JW Marriott Tucson Starr Pass, is the category closest to reaching its prior prior peak for revenue per available room.
Data collected from STR showed that the best days for hotel bookings in Tucson are Friday and Saturday. “That tells us we’re doing a good job getting leisure travelers here,” DeRaad said. “But, we’re not getting the growth we need on the other days. From our standpoint, our growth comes back to group business. We’ve gotta find a way to get that back.”
DeRaad said Visit Tucson will look at ways to increase weekday occupancy by attracting group bookings and increase occupancy by at least two percent.
“Across the industry it’s growing, but here it’s been slow,” DeRaad said. “We’re going to do what we can to market this destination effectively.”
STR predicts steady growth through 2015. In Phoenix, revenue per room is expected to grow between five and ten percent. “Hopefully the gains we are seeing in Phoenix will spill out into Tucson” Culbreath said.
Projections for Tucson show a 2 percent growth in revenue per room by the end of 2014 and into 2015. A slight decline of 0.2 percent in occupancy is expected, but a 3 percent increase in average daily rate is expected in 2015. Revenue per available room in Tucson is projected to increase by 3.2 percent.
A few new projects in the pipeline will increase the supply in Tucson by about 400 rooms. However, Culbreath said Tucson was the first market she looked at with “such few projects in the pipeline.” Those include an unnamed property at UA TechPark, a Marriott downtown and a Value Place Hotel.
On the national level, a total of 400,000 rooms are under contract to be built, which is an increase of 14 percent. “Over 70 percent of those are upscale to upper midscale,” Culbreath said. “We’re not seeing that level of new builds in the luxury and economy segments.”