Bleak 2009 Shrinks Revenue for State's Biggest Hotels

Ask someone who works in the hotel industry how 2009 went, and you might get an answer similar to Kurt Schatzl's assessment.

"We're just glad it's over," said Schatzl, general manager of Embassy Suites Hot Springs Hotel & Spa and treasurer of the Arkansas Lodging Association.

With a few exceptions, the top-selling hotels in the state were all down last year, according to city tax records. Twelve of the 35 top-selling hotels on the annual list in Arkansas Business were off by 15 percent or more.

(To see a list of the top hotels in the state, ranked by revenue in 2009, click here. A spreadsheet version is also available.)

Hotel demand for the first half of 2009 was good, but fell off significantly - perhaps as much as 25 percent - during the second half of the year, Schatzl said. Embassy Suites in Hot Springs was down about 10 percent last year, with revenue of $7.71 million, according to tax records.

Roger Davis, general manager of Holiday Inn Northwest Arkansas in Springdale, echoed Schatzl's assessment of 2009.

"Awful," he said.

Room revenue for Holiday Inn Northwest Arkansas last year was just less than $4.28 million, nearly flat compared with the previous year, a development Davis attributed to that hotel's meeting space.

"We're lucky that we have meeting space - over 50,000 square feet of meeting space. So we were able to generate additional room night revenue from the group meeting segment," he said.

Davis is also the area general manager for the Hampton Inn & Suites in Springdale and the Northwest Arkansas Convention Center at Embassy Suites Northwest Arkansas in Rogers.

Part of the reason for a tough year in northwest Arkansas was that the area had been flooded with limited-service hotel rooms in recent years, he said.

"In northwest Arkansas, there were over 765,000 annual room nights opened in this market since the end of 2007. That's a significant amount of annual room nights to put in any market, never mind northwest Arkansas," Davis said.


Optimistic Outlook

Both Davis and Schatzl said they expected business to pick up in the second half of this year.

"We think 2010 is going to be improved," Schatzl said. "The convention calendar in Hot Springs looks very good, but I think there are still threats. A weak economy [or] perhaps rising gas prices could be a threat to the industry recovering. But with Hot Springs being a convenient drive, I don't think higher gas prices would hurt us too much."

Although the first part of the year has been slow, Davis said, he has seen signs that the industry could be improving.

"We're seeing that March has a little bit more buoyancy, not only in our market, but in several other of our hotels as well. The transient market seems to be rebounding slightly, which is good news for all of us. And the group market is again starting to pick up somewhat."

The transient market refers to individuals who are traveling for work or leisure, he said.

"We are seeing signs in our company that individual transient reservation booking pace is improving over the last four or five weeks," Schatzl said. "The pace of reservations is picking up."

Davis said he and his colleagues were "cautiously optimistic" about the second half of 2010.

"We estimated, I think correctly, that the first quarter was going to be a tough quarter, with some slight growth in the second quarter," he said.

But despite the gradual improvement, "overall it will be flat or slightly above what we did in 2009," he said.


Bed Bargains

One trend that hoteliers have been tracking is the number of rooms being booked by third-party Web services such as and Priceline.

"Twenty-one percent of our business is coming from e-commerce these days," said Gordon Rostvold, general manager of the Doubletree Hotel in Little Rock.

That hotel's guest rooms and its meeting area were renovated in 2008, with as many as 40 rooms at a time being updated.

"I think for us it was a year of recovery," Rostvold said of 2009. "We had growth, but it was relative to the year before."

Average daily rates at Holiday Inn Northwest Arkansas fell last year by at least 10 percent over the year before, Davis said.

"There was also a lot of bargain shopping from people looking for a better deal, so yes, we had to give more concessions. Our revenue per available room decreased significantly, as it would in a down economy," he said.