LI Business News: “LI Hotel Biz Heats Up”
LI hotel biz heats up
Long Island hotels are having a very good year overall with occupancy and rates boosted by everything from weddings to warm weather, international and corporate travel and major sporting events.
A study by travel research firm STR, based in Broomfield, Colo., commissioned by the Hauppauge-based Long Island Convention and Visitors Bureau, painted a picture of a region that has recovered from the recession and is on a roll.
And conversations with hoteliers at the LICVB event held at the Melville Marriott where the study was presented at a Wednesday luncheon confirmed an overall rosy picture for the local hotel industry.
“The study shows that Long Island is one of the leaders in the nation as far as occupancy rates and average daily rates,” LICVB President Kristen Jamagin said after STR’s presentation to an audience of roughly 75. “We’re in a great position. We surpass the national average in most of those numbers.”
Hoteliers at the event seemed happy, describing an industry that, while it was hit hard in the Recession (and revived by Hurricane Sandy), has continued to perform well over the past few years.
“Business is good,” said Dawn Bindrim, rooms division manager for Danfords Hotel and Marina in Port Jefferson.
Long Island occupancy year to date through July is up about 2.2 percent to 72.9 percent, average daily rates are up 2.9 percent to $145.60 and revenue per average room is up 5.2 percent to $106, according to STR.
“Long Island is a bright spot,” Alison Hoyt, STR’s director of consulting and analytics, told the audience of hoteliers during her presentation to the LICVB.
Long Island occupancy and rates dropped in 2009 and 2010, then surged due to the impact of Hurricane Sandy, which sent occupancy up to an unheard-of 76 percent. Numbers slipped before rising again.
“Then we saw the market really take off,” Hoyt said. “If you look at the past 12 to 18 months, there’s been growth of rates and occupancy well surpassing the market in 2006.”
Long Island as of July experienced 1.2 percent year-over-year growth in supply compared to a 3.4 percent jump in demand.
“Demand is outpacing supply in those areas,” Hoyt said of the mid-price range, while upper scale rates were roughly flat at about $160.
Group bookings – 10 people or more- were up 6.0 percent year to date on Long Island, also fueling a robust business.
“We’re seeing growth in the group business in markets like Long Island,” Hoyt said, noting group bookings surged in Nashville and edged up in Atlanta. “We’re seeing some markets emerge as group destinations.”
Nassau had an occupancy rate of 78.8 and an average daily rate of $147 year to date, while Suffolk was at 68.8 percent and $144.
Cape Cod and Long Island, both beach markets, Hoyt said, are growing at similar levels, although average daily rates on Long Island at $145.60 were lower than Cape Cod’s $163.70. Long Island’s 72.9 percent occupancy was better than Cape Cod’s 56.7 percent.
Bindrin said corporate retreats, weddings, engagement parties and baby showers are keeping Danfords busy and booked.
“I don’t think more people are getting married,” Bindrim said. “We happen to be a destination for that. We’re a waterfront property.”
Other hoteliers said hot weather has meant more people heading for Long Island beaches, including some staying at hotels.
“The weather,” Lesley Flaherty, sales manager at the Inn at Fox Hollow in Woodbury, said. “Long Island is full in the summer. We have a very thriving business at the catering hall. We’re full every weekend.”
She said weddings have been keeping her hotel busy and the Barclay’s golf tournament boosted occupancy.
The movie industry is even helping hotels book rooms, as workers come in from around the nation to join projects.
“We had a lot of success with movie production that took place on Long Island,” said Suzanne Francica, general manager of the Inn at Fox Hollow. “There was a lot of filming happening at Gold Coast and Grumman Studios.”
Long Island is getting more rooms as well, with four hotels currently in construction including 552 rooms slated to open next year.
Another two hotels with 161 rooms are in final planning and two totaling 320 rooms in earlier stages of planning.
There are 1,033 rooms and eight projects, four in construction, two in final planning, two in planning, in the works.
“You will see the impact of that in 2017. But it’s not at levels that other markets are feeling,” Hoyt said. “There’s also attrition in some of those projects. They don’t all end up happening.”
Jamagin said Long Island still has a “limited supply” and even 1,000 new rooms “is really not a lot for a destination of our size.”
Long Island welcomes roughly 9.1 million visitors annually, and includes about 18,000 rooms, making 1,000 rooms an increase of roughly 6 percent.
“The demand is higher than the supply,” Jamagin added. “That puts us in a good position.”
STF forecasts 1.1 occupancy growth, 2.9 percent average daily room rate growth and revenue per room up 4.1 percent for all of 2016.
However, for 2017 it forecasts occupancy to drop by 0.5 percent, with average daily rates up 3.3 percent and revenue per room up 2.8 percent.
“Overall, Long Island is continuing to outperform New York City in terms of overall growth for 2017,” Hoyt added. “The industry is at record levels. We’re seeing those growth rates slow.”
She said STR is “projecting a controlled landing for the industry rather than a crash” after a robust run up in rates and occupancy.
“New supply is not going to overbuild and cause the next downturn,” she said. “The industry is much stronger than what we’ve seen in prior cycles.”
STR, which Hoyt said receives data from hotels accounting for 65 percent of Long Island rooms, is also seeing some other factors hold back growth.
Airbnb is impacting the hotel industry, but Hoyt said exactly how isn’t as clear as one might expect, since it’s not easy to determine how many of its travelers otherwise would have stayed home.
“I think it has a different impact on each destination,” Hoyt said. “In some areas, it’s bringing travelers there who couldn’t afford before to stay in a different manner. If you’re an attraction or restaurant or any other non-hotel entity, you might benefit from these travelers.”
Uncertainty may be beginning to take its toll on travelers as well, preventing some from hitting the road.
“One of the reasons we’re seeing slowing demand and rate growth is uncertainty, this unknown,” Hoyt said. “Maybe I’m not planning my vacation with my family. Whether it’s the election or terrorism or Zika, any number of factors are keeping families at home and not necessarily traveling.”
Long Island hotels, however, are likely to see some positive headwinds related to the election about to blow through the region.
The presidential debate at Hofstra University, Flaherty added, is already bringing more bookings.
“There’s a lot of interest in the debate from around the world,” Flaherty said. “Moreso probably than the last time.”