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Business Observer Thursday, Jul. 21, 2011 10 years ago

No Vacancy

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The hotel market in the Naples area is the strongest on the Gulf Coast, but data show a lack of pricing power.
by: Jean Gruss Contributing Writer

Steve McIntire likes to tell the story of farmers who get together to decide at what prices they'll sell their pigs.

Problem is, he chuckles, it never works because there's always one farmer who undercuts the others and sells his pigs at a lower price.

McIntire, president of the Collier County Lodging & Tourism Alliance and general manager of Bellasera hotel in Naples, says the hotel business is similar.

Consider the month of March, when Naples-area hotels were nearly 90% full, according to data from the local convention and visitors bureau. Despite the highest occupancy rate in years, the average daily rate rose just 2% that month, to $240.60 compared with the same month a year earlier. In fact, it was lower than the $241 Naples hoteliers charged on average in March 2009.

“I think we all got caught flat-footed, but we were happy to see [visitors],” McIntire says. In essence, the data show hoteliers traded higher occupancy for lower rates.

Like every other business in tough economic times, generating sales is the order of the day. To make sure they got heads in beds, Naples-area hoteliers discounted heavily for the traditionally busy winter season. To their surprise, many people didn't wait until the last minute as they have for the last few years. “Everyone pre-booked at lower rates,” McIntire. “There was a shift in the buying pattern.”

Naples hoteliers underestimated the advanced bookings and were left with few rooms for higher-margin walk-in traffic. Group business was especially strong because larger hotels in the area pushed hard to land that business, filling lots of rooms at a discount. “We're back very close to 2009 numbers,” McIntire says.

The good news is that corporate business travel is finally coming back after having been demonized by politicians in Congress. The so-called “AIG effect” is wearing off. “It's not such a taboo subject,” McIntire says.
What's more, the affluent visitor to Naples returned to the area, especially because horrendous winter storms chased them to Florida. Summer bookings look promising, too. “We're way ahead of last year,” he says.

Still, hoteliers aren't ready to raise rates in a big way despite an improved outlook. “Until everybody feels good about the economy, we're going to be cautious about rates,” McIntire says. Unfortunately, McIntire says that situation may linger until the presidential election next year.

Meanwhile, McIntire is making a push to expand the alliance's membership beyond the 40 hotels that currently make up the organization. He estimates there are at least 1,100 businesses in Collier County that are directly related to tourism, from local attractions to restaurants and charter boats.

The idea is to broaden the organization's network so members can work together or refer business to one another. In addition, a larger group would be more effective politically on matters related to tourist-tax spending.

ABOUT
Organization: Collier County Lodging & Tourism Alliance
Next meeting date: 8 a.m., Aug. 24
Subject: Marketing your business to area hotels
Location: Bellasera Hotel, Naples
Cost: Free to business owners and individuals in the tourism industry
Registration: Email [email protected]. Deadline is Aug. 17

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