Jennifer Marvin of Rodgersville gets checked into the Ramada Inn hotel by Glenda Con on Saturday afternoon. Nashville's hotel bookings slid sharply lower in May and June. ARMANDO SANCHEZ / THE TENNESSEAN
By MATT MEDVED
Nashville’s hotel bookings slid sharply lower in May and June, suffering from the summer doldrums as vacationers around the country took shorter trips or stayed home because of rising gas prices and economic uncertainty.
“It is a significant decrease, but it’s not too much of a difference from what we’re seeing in larger markets,” said Smith Travel Research vice president Duane Vinson.
The most recent data from Smith Travel, a Hendersonville-based research firm, shows hotel occupancy in Nashville fell 8.4 percent in June compared with a year earlier across all properties, following a 12.5 percent drop in May. Budget hotels were hit the hardest, especially last month.
Vinson said the economy played a role in the declines, as did the fact that Nashville has built more hotel rooms in the past year, adding about 600 rooms to Music City’s summertime supply of almost 34,000 rooms.
“It certainly could be the rising gas prices, but it’s not just them,” Vinson said. “In light of a downturn in the economy, we’re continuing to open new hotel rooms, which is probably not the best thing to happen with the drop in room demand.”
Vinson said cities considered prime leisure destinations are feeling the strain more than business markets. Nashville straddles the line between the two categories, he said. Room rates here are holding steady, though, between $94 and $98 a night on average, Smith Travel data show.
“The leisure markets are highly dependent on flying traffic, and we’re obviously seeing an impact of the airline industry cutting flights,” Vinson said.
Few top markets gain
Among the nation’s top 25 travel markets Dallas, New York and San Francisco are seeing slight improvements in hotel occupancy. New Orleans also posted big gains in travel this summer, but that’s in part because the Crescent City is still recovering from shattered tourism numbers in the wake of Hurricane Katrina in 2005, Vinson said.
Walt Baker, chief executive officer of the Tennessee Hotel and Lodging Association, said Nashville’s marketing partnership with Southwest Airlines has helped insulate the city from some of the airline industry fallout, which is linked to higher fuel prices. Southwest has done better than most airlines in hedging against higher fuel costs with long-term contracts for jet fuel.
“Southwest was terribly smart in buying their fuel futures, and now they’re paying a lot less for jet fuel than other airlines,” Baker said.
Drew Dimond, founder of the Dimond Hospitality Consulting Group, said fewer leisure travelers are on the road this summer, and that hurts many hotels.
“Since this time of the year is heavily weighted towards leisure travel, it gives you an idea of who is not traveling,” Dimond said.
All Nashville hotels are not created equal. The latest Smith Travel Research report shows economy class hotel occupancy down 12 percent in June, and about 10 percent off for the first six months of the year compared with the same period in 2007.
“My sense is that the people who would stay in low-budget hotels are the hardest hit by what’s going on,” Baker said, referring to the nation’s economy. “It is severely curtailing their activities. Upper-end customers are probably trading down to your mid-scale (properties), but there’s no place for budget hotel customers to fall out to.”
Ray Waters, the general manager of the Nashville Hilton Downtown, said the Hilton has fared pretty well this summer, with occupancy coming within “four-tenths of a percent” of last year’s figures. Waters attributed the Hilton’s relative success to its focus on business conventions.
Conventions are stable
“We try and fill up with group business because they tend not to cancel and are much more stable than transit customers,” he said, adding that travelers are more cost-conscious. “I think the hotels sitting back and waiting for phones to ring are going to be the ones suffering,” Waters said.
Nevertheless, some Nashville-area residents are continuing to make travel plans, even if they are more subdued than in years past.
In previous years, 65-year-old Brentwood resident J. Michael Patterson took overseas trips to England, Scotland and Ireland. But this year he plans on visiting his children in Knoxville, Charlotte and Atlanta, while checking out local attractions and staying in budget hotels along the way.
“I’m going to be making a number of day and weekend trips this year, not only because of the gas prices, but because of foreign exchange rates, too,” Patterson said.
Baker said the hotel association adjusted its summer marketing to more of a local approach within a 300- to 400-mile radius. “Locals are probably less likely to pack a bag and stay at the neighborhood hotel, but the real magic will be somewhere outside of 100 miles where it takes less than a tank of gas to get there,” Baker said.
Dimond said a local focus makes sense, but there’s not a lot to be done to cure the weak occupancy numbers. “The hotel industry usually lags six months behind the economy,” he said. “The best strategy is an improved economy.
“We’ll start seeing improvement when the Dow Jones average hits 12,500 points. But the key is: Will hotel operators be able to maintain their rates? If they maintain (room rates), then I think they will be OK. The big fear is that they’ll have to start discounting. It’s a matter of weathering the storm.”
