St. Louis waits for turnaround to take hold

Hotel & Motel Management, March 15, 2004 by Elaine Yetzer Simon

With fewer flights into the city and a variety of new hotel supply, the lodging industry in St. Louis has a lot of room to improve.

"In general, the hotel business is on the softer side," said Hemant Patel, general manager of the Howard Johnson Inn and Conference Center in St. Louis. "The airport is really on the soft side right now, with the number of flights going down almost 50 percent. We have seen reduced business as well. We've lost double-digit occupancy for the year.

"People say the economy is doing better, but the hotel industry will be the last to see the effect of it."

Knud Svendsen, v.p. of sales for Adam's Mark Hotels & Resorts, which has the 1,006-room Adam's Mark St. Louis in its portfolio, said the hotel isn't doing too poorly, all things considered.

"As a whole, the St. Louis market is slightly down versus the prior year," Svendsen said. "There's been pretty dramatic increase to supply during the last year. The Adam's Mark overall is holding its own over the last 12 months. Average rate in the marketplace for our property is relatively flat. We're slightly down in occupancy."

Being located outside the city has been a benefit for the Hampton Inn and Fairfield Inn in Fairview Heights, Ill. The hotels, which are located 10 miles from downtown St. Louis, are owned and managed by Tharaldson Lodging Co.

"As far as the Fairview Heights market, it is doing very well; the market overall is very strong," said Bill Clouse, regional v.p. for Tharaldson. "It's been strong for the last three years. Part of it is that we get a lot of business travelers who stay on the outskirts of the city where hotels aren't as high priced and there are no parking fees."

Clouse said both 63-room hotels have occupancies of more than 80 percent, with average daily rates in the mid-$70s. The depressed business has forced hotels to change the way they go after business.

"The focus of late has been on citywide conventions," Svendsen said. "We've always been a player in the citywide market, but we'll be looking to shift more to in-house business and business we can accommodate in our own meeting space within our facility."

To accomplish the new goals, Adam's Mark has beefed up the direct sales efforts at the property and at the national sales offices, according to Svendsen.

At the Fairview Heights properties, a new Four Points by Sheraton property in the area forced a change in focus.

"When the Four Points opened, it took some of our share, so we were forced to look at other avenues," Clouse said. "We opened up our government rate, so we were able to replace some of our lost business with some of the [local] Air Force base business. It cost us a little average daily rate, but we held occupancy very strong."

Patel said his goal is to add to the guest experience to draw more visitors.

"We had dropped rates, but that's not the answer," he said. "We try to provide more for the money. We've added a few in-room amenities, such as water, Coke, snacks, free continental breakfast, shoe shines, afternoon cookies and sewing kits. We also offer a coupon for a free cocktail when guests check in.

"Guests like that. It is helping."

Looking forward

Svendsen said he's optimistic about the future performance of the St. Louis Adam's Mark.

"We're looking for improvement in 2004 and continuing improving conditions in 2005," Svendsen said. "I think you'll see an improvement in occupancy at our facility and a slight increase in average rates as we move forward into 2004."

Patel said he's hoping for a modest increase of performance at his hotel.

"If the economy continues to rise, we'll at least maintain 2003 performance," he said. "It might even get better by about 5 percent. That's what we are banking on."

Patel said he's anticipating raising rates during 2004.

"We'll probably wait until springtime," he said. "Winter is usually a slow time as it is. How much, we don't know yet. We might not see the effects right away, but maybe by next winter."

Patel said he also expects TripRewards, a guest-loyalty program Cendant Corp., the parent company of the Howard Johnson brand, rolled out recently, to make a difference starting during 2004.

"Cendant is working very hard on the program," he said. "Being a Cendant chain, we are banking on it that we'll maintain customers and gain some leisure travelers as well. We'll start seeing it take effect in March or April when people start using their points."

St. Louis is still a great place for a lodging property, according to Svendsen.

"We think the worst is behind us," he said. "We think St. Louis will continue to improve and our hotel will be the beneficiary of that. We're bullish on St. Louis in the short term and the long term."

St. Louis

Guestrooms: 34,562

Properties: 289

Occupancy rate: 58.2 percent (3.8-percent decline year over year)

Average daily rate: $72.93 (0.8-percent increase year over year)

Revenue per available room: $42.45 (3.0-percent decline year over year)

Numbers through December 2003