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An Optimistic Turn

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  • | 7:24 a.m. March 18, 2011
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Industry. Hospitality and tourism
Issue. Falling prices versus rising occupancy
Key. Working internally to fill rooms and tables
By the numbers. Click here for an overview of hospitality activity along the Gulf Coast.

Next time you're out and about at one of the many hotels and restaurants along the Gulf Coast, the visitors you encounter may not be from another state or country. They might be fellow Floridians from a county or two over instead.

Hospitality and tourism leaders are expecting more tourism this spring and summer from within Florida because of continuing economic troubles nationwide and gasoline prices quickly approaching $4 per gallon. Yet the industry outlook for 2011 is a lot like those for other Gulf Coast businesses — slow recovery with a dash of optimism.

“February and March are pretty strong,” says Jason Parsons, general manager of the Naples Beach Hotel & Golf Club. “It's going to be a good year, but not as good as five years ago. It's going to take some time to get back.”

Although demand has started picking up as hotels saw increased occupancy rates last year, prices continue to lag with average daily rates falling from Tampa to Naples in 2010 — as much as 25% behind where they were prior to the recession.

As a result, hoteliers and tourism officials have kept their promotional focus on pricing incentives and creating clever deals to attract customers. At the same time, they've begun marketing to less-obvious targets to bring in revenue, such as in-state travelers and youth sporting events.

“We're becoming cautiously optimistic for the summer,” says Jim McManemon, general manager of the Ritz-Carlton, Sarasota hotel. Uncertainty over world events and their effect on the U.S. economy is causing more guests to book at the last minute, rather than months in advance when discount deals are more common.

Parsons notes that many of his guests who used to book up to six months in advance are now doing so just a week prior to their stay now. While that may not hurt much pricewise, he says, it diminishes their chances of getting the best rooms at the resort.

Still, hoteliers are expressing greater certainty that this year will be better than 2010, which was consumed by the aftermath of the BP Deepwater Horizon disaster that soiled much of the Gulf of Mexico. None of the crude oil reached our shores, yet it was difficult to overcome the national perception that all of Florida's beaches would be awash in tar balls as shown in media reports from the Panhandle.

Spending still a concern

So far in 2011, conditions look more favorable. The bitter cold that marked most of last year's high season stayed away, weather conditions have been nearly perfect through the first half of the peak month of March, and operators are hoping to get by a sixth consecutive year without hurricanes.

Money appears to be the only object. Some of the same folks from around the country who worried about BP oil effects last year are now concerned about personal finances as high unemployment lingers and people who are able to find new jobs are being paid less.

Hotels have offered package discounts to counter the economy's ill effects, including the luxurious Sarasota Ritz-Carlton, which posts a “Resort Reconnect” special on its website with rates as low as $474 per night through Sept. 15. That's $75 more than the typical $399-a-night starting rate during high season, but the deal offers $150 worth of extras, including breakfast for two and a $100 resort credit, says Suzanne Willis, hotel spokeswoman.

Price cuts continue to squeeze operators' profit margins since the recession began in late 2007. Figures from Henderson, Tenn.-based Smith Travel Research show revenue per available room has fallen sharply since 2007, by 20% to 25% along the Gulf Coast, as hotels continually cut their daily rates to entice more guests.

Occupancy rates improved slightly over the past year, but they are still well below the pre-recession 60% range and fell to as low as 30% during September, the weakest month for area tourism, according to STR data.

“We're getting the bodies, but the rate hasn't come back yet,” says Steve Hayes, executive vice president of Tampa Bay & Co., the area's convention and visitors bureau. Development of new hotels has ground to a virtual halt for the time being, which he believes may help existing hotels in the near term.

Creativity brings guests

Newer hotels on the coast have gotten more creative in order to offset reductions in room rates. For example, Postcard Inn on the Beach, a renovated surf-themed hotel with 196 rooms on St. Pete Beach that opened in late 2009, offers various discount packages including food and wine with room rates as low as $49 per night.

“We've really positioned ourselves well,” says Patrick Brophy, the hotel's general manager. “We've priced ourselves pretty well during these tough times.”

While Postcard Inn has received a wealth of favorable reviews from national travel magazines and NBC's “Today” show, Brophy also points to a favorable response from “over the bridge” guests who live inland and are looking to visit beaches closer to home, staying on the Gulf rather than traveling to South Florida. He says some guests spend Sunday night at the hotel and drive to work the next morning.

Brophy adds that the hotel has also benefited from baseball spring training this season, particularly among Philadelphia Phillies fans attending games in Clearwater and other nearby cities. It is also participating in a promotional effort by Pinellas County tourism officials called “100 Days of Summer” that will be geared toward in-state residents and highlight local hotels and attractions between Memorial Day and Labor Day weekends.

As for tourists from Europe, where the recovery appears already under way, it's costing more to visit Florida. British airline passengers are subject to 55% higher duties on flights to the United States, likely motivating them to book holidays elsewhere on their own continent. For example, a standard duty of $72 will now be nearly $112. Also, some charter carriers dedicated to Florida travel have gone under in recent years.

Europeans, one of the state's largest tourist segments, tend to book trips to the Gulf Coast in mid-to-late summer, creating a sort of balance for area hotels beyond the usual domestic winter traffic from northern residents seeking a break from freezing temperatures.

“July is almost our second season,” notes Mark Blust, vice president of operations for the Fort Myers-based Pawnbroker Restaurant Group. He says the chain's bookings are solid through this spring, though “a lot of people up north are taking a wait-and-see attitude.”

This winter was especially harsh nationwide, with prolonged snowstorms preventing some usual coastal visitors from even being able to leave home. Now that the snowstorms are presumably over, Blust says vacation plans are being held up as school parents determine how many makeup days will be required going into early summer.

Local hoteliers hope to make up for January shortfalls with a stronger March and April, particularly with the Easter holiday weekend landing later than usual this year on April 22.

Youth sports bring business

One good boost hotels have received so far this year is bookings by youth sports teams who have traveled to the coast for winter tournaments at times when it's too frigid to play soccer, baseball or lacrosse back home.

“We're definitely seeing an uptick in that business,” Hayes says, noting that Hillsborough County counted 17,000 room nights over President's Day weekend (Feb. 19-21) booked by 750 youth teams alone, not counting the Florida State Fair in Tampa at the same time.

The Tampa Bay Sports Commission, a non-profit agency related to Tampa Bay & Co., promotes the area as an ideal site for amateur athletic events. The commission receives $400,000 annually from the Hillsborough County Tourist Development Council, with the economic impact from local sports activities measured in millions.

“The impact is astronomical,” says Rob Higgins, the commission's executive director. He estimates the seven President's Day events brought around $14 million to the area, adding that the total number of events increased during the past year from 80 to 130.

When the kids aren't suited up to play, there are other newer attractions in the Tampa Bay market for families and other tourists this year, including the new Salvador Dali Museum in St. Petersburg, which opened in January, and the Cheetah Run addition to Busch Gardens in Tampa, set to open in late May.

Even when money is tight, Hayes says many families find different ways to save while treating their youngsters to a worthwhile summer vacation. “They may not buy ice cream one night,” he says as an example.

But he adds that hospitality providers offer various ways to help, whether through discount coupons, kids-eat-free restaurant offers, or free gas cards mailed by hotels to guests who stay a minimum number of nights. He says those deals seemed to work well in 2008, the last time gas prices were at current levels.

Sports, music madness take over Tampa

March is the biggest month in the Gulf Coast hospitality calendar, between all the spring breakers crowding area beaches and baseball fans booking rooms near their favorite team's spring training parks. However, hotels in Tampa are getting an added boost this weekend, thanks to college basketball and country music.

Tampa Bay & Co. estimates as many as 10,000 room nights will be booked between downtown and Westshore as hoops fans flock to the St. Pete Times Forum for the first and second rounds of the NCAA Division I men's tournament, while Kenny Chesney headlines an expanded country concert at Raymond James Stadium.

The two events should provide a substantial bump in occupancy for Bay area hotels. In March 2010, the market's hotel occupancy reached 73% — good, but below the 80% range for the month in years prior to the recession, according to Smith Travel Research.

Professional sports add to the mix: Canadian hockey fans from Toronto, Montreal and Ottawa have been down this season to see their teams play the Tampa Bay Lightning and have booked rooms from the Forum to the beaches.

“We're being told it costs more to go to a game in Toronto than to fly down here,” says Patrick Brophy, general manager of the Postcard Inn on St. Pete Beach. The Canadian dollar is slightly ahead in value against the U.S. dollar, he adds.


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