March Tourism Strong, But April Fizzles

By Desiree Parker Friday, May 21, 2010

Though things seemed to be rounding a corner with higher March numbers, hotel occupancy and revenues slumped again in April, with visits and cash flow for the year so far still trailing last year.

Though March occupancy numbers were up 7.6 percent over last year (likely thanks to Busch Gardens opening longer for spring break), April occupancy was down 6.3 percent. Last year was an abysmal year for tourism due to the recession, and 2010 numbers lower than 2009 will mean a tougher year for hoteliers and for localities that rely on room taxes for revenue.

Through April, the year’s occupancy rates are down only 2 percent over last year, but revenues per available room (calculated based on room rates and occupancy and one of the most important gauges in the industry) is down nearly 6 percent this year. Last year, revenues per available room were down almost 15 percent over 2008.

Hotel Motel Association President Chris Canavos says he’s still concerned about the low revenues, and thinks that the efforts to turn things around aren’t working. “We had beautiful weather in April,” he says, which is generally a draw for last-minute visitors. The Triangle “had a robust [marketing] campaign that started earlier this year, with even more ads. When occupancy drops and rates drop, that shows the problem.”

Revenues per available room dropped over 11 percent in April – a number that’s even lower than occupancy rates because it reflects the price war going on between hotels as they drop rates to entice dwindling numbers of customers.

“The upper tier [of lodgings] drops their rates to get business,” Canavos points out, “and people trade up.” Travelers looking for a deal can get a higher-rated room for less, which means the lodgings that are in the middle- and lower-tiers need to also move their rates down. Fewer people are visiting, and hotels are charging less per room, even compared to last year during the recession.

“It’s disheartening,” says Canavos. “We thought we’d hit rock bottom last year.”

The Triangle localities have released their budgets for the next fiscal year, and each contains projections of less room revenues and reduced spending based on those projections. Clearly, governments aren’t expecting good news in coming years when it comes to tourism.

Canavos says he still holds out hope that things will turn around. “I believe in this destination, I think we can bring it back.” How that might happen is something local tourism industry experts are still trying to puzzle out.