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VOL. 126 | NO. 245 | Friday, December 16, 2011

Four-Star Forecast

Downtown hoteliers eye strong 2012 as occupancy rates improve


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Recovery continues in the local hotel market, fueled in part by several Downtown luxury hotels that have experienced healthy business in 2011 and anticipate an even stronger performance next year.

The lobby of the 110-room Madison Hotel is decorated in Christmas colors. The hotel completed major renovations of its guest rooms, lobby and restaurant this year.
(Photo: Lance Murphey)

Overall occupancy rate year-to-date for all hotels in the Mid-South is 59.4 percent, up from 57.6 percent last year at this time, according to third-quarter statistics from Smith Travel Research. The market’s average daily rate (ADR) has held steady since last year, hovering near $76, while revenue per available room (RevPAR) has jumped to $45.14, up from $43.81.

The numbers skew higher for the Downtown/Midtown submarket due to a higher percentage of luxury hotels. Average RevPAR year-to-date for Downtown/Midtown hotels has jumped $2.39 to $73.39, up from $71.10 in 2010. ADR has dipped less than 1 percent, from $126.25 in 2010 to $126.11 this year. The overall occupancy rate is 65.5 percent, up from 63.3 percent last year.

“Our business is up overall by roughly 6.5 percent over last year, and in 2010 we were up almost 11 percent over the previous year,” said Madison Hotel managing partner Mohammad Hakimian, who says his hotel’s higher-than-average 4 percent RevPAR increase is partially attributable to not discounting rates as much as its competition.

The 110-room Madison completed major renovations of its guest rooms, lobby and restaurant this year (total cost between $1 million and $1.5 million), so none are planned for 2012.

“We are budgeting to do more business next year for several reasons,” said Hakimian, who breaks his hotel’s clientele into 50 percent leisure travelers, 30 percent corporate and 20 percent groups. “The Convention and Visitors Bureau’s advanced bookings for next year are ahead of last year’s pace, so that bodes well for us.”

For the 464-room The Peabody hotel, business in 2011 overall has held steady, with occupancy rates even to last year, ADR up 2 percent and RevPAR up 2 percent.

“Corporate business has shown signs of improvement and group activity has picked up in Q3 and Q4,” said The Peabody director of marketing Craig Smith. “The NBA lockout has had some effect on activity Downtown and has impacted parking and outlet revenues. The relocation of Pinnacle Airlines has helped our outlet traffic. We are looking forward to the positive effect of the (Great) American Steamboat business starting in April of 2012.”

This year, The Peabody completed power washing, caulking and repair work to the exterior of the property, which should help to protect the building and create additional energy efficiencies. Capital improvements for 2012 will include the replacement of more than 880 windows as well as all guest room door and locks.

“Our projections for 2012 remain positive,” Smith said. “We are looking at a 3 percent to 4 percent increase overall with much of that being driven from the group market.”

The 203-room Westin Memphis Beale Street, across from FedExForum, and general manager Patrick Jordan are gearing up for the start of the Memphis Grizzlies’ season, which gets under way with an exhibition game Friday, Dec. 16.

“Overall it’s been a very good year for us,” said Jordan, who explained that they had to temper some expectations for this year due to the volatile economy and the delay to the start of the NBA season. “Being as close to the FedExForum as we are and doing as much business as we do with the NBA, obviously the NBA lockout had an impact. But we are excited about the teams coming to town, and the majority of them will be staying with us. It’s a great way to head into 2012.”

The Westin has benefited this year from a strong event schedule at FedExForum, as well as the hotel’s new on-site restaurant, bleu, which opened five weeks ago.

“On event nights at the Forum, bleu is guaranteed to be full or near capacity,” said Jordan. “And the bleu menu has been really well received by our in-room diners. It makes our in-room dining service different from anywhere else in town.”

Jordan expects 2012 to be a great year, and he points to the return of the Conference USA basketball tournament to FedExForum next spring as one of the many reasons.

Another of the Downtown market’s luxury offerings, the 230-room Crowne Plaza Memphis Downtown, is welcoming new management as the New Year approaches. General manager Steve Book took the reins at the hotel this past Monday.

“The business here at the Crowne Plaza was steady this year, and we expect a slight uptick for 2012,” said Book, who just arrived in town from Columbus, Ohio, where he managed a Holiday Inn.

Hotel consultant Chuck Pinkowski of Pinkowski & Co. forecast continued recovery for the Mid-South market next year.

“Overall, RevPAR for the Mid-South is up approximately 3 percent for 2011 and the forecast for next year is another 3 percent increase,” said Pinkowski. “And those figures should be higher for Downtown than the rest of the city.”

PROPERTY SALES 110 110 19,224
MORTGAGES 125 125 22,175
BUILDING PERMITS 116 116 39,432
BANKRUPTCIES 62 62 12,310