Hoteliers Hear Bad News, Good News About Tourism

Wednesday, November 03, 2010

Tuesday evening, a crowd gathered to hear bad news they already knew: Williamsburg’s hotel industry isn’t in good shape. They also heard some ideas on how they might fix the problems, advice that included figuring out what the 'Williamsburg' brand is and emphasizing current strengths.

The Williamsburg Hotel Motel Association hosted representatives from Smith Travel Research and Dr. Ron Hess, professor of business at William and Mary, at their Tuesday meeting. Williamsburg council members and city management staff, business and tourism professionals along with WHMA members watched the hotel industry’s most trusted analysts show slides of where exactly Williamsburg hotels are performing in relation to competitors, and the news (as most of the crowd knew) wasn’t good. Hess presented a recent tourism analysis he’d completed, and shared some ideas to an interested crowd on how the graphs might get to pointing in the right direction.

Lana Yoshii, STR’s vice president for content management, told the audience that the recession’s impact on the national hotel industry was a “perfect storm” – supply in the form of new hotels across the country was soaring just as demand tanked.

Hotel rates across the country have declined so much in recent years due to more transparency with rates thanks to online booking agencies like Expedia and Travelocity, she said, which let customers shop around for the best rates like never before. This has triggered rate wars among hotels and booking companies to snag the value-oriented shopper.

Williamsburg (which to STR includes hotels not just in the city but also in the rest of the Historic Triangle) has had a better year in 2010 as far as hotel occupancy goes but was still lagging behind other areas, Yoshii said, because it “had a big hole to climb out of” thanks to an almost 16 percent decline in demand in 2009.

She also pointed out that occupancy numbers are bouncing back faster than the average daily rates hotels are charging, which means there are more people in rooms compared to last year, but hotels are making less on each room.

Yoshii broke down the numbers for hotels in each of the three Triangle localities, and she showed that James City County has significantly higher rates than York County and Williamsburg, with an average rate of $92.73 versus Williamsburg and York County, both around $76 on average.

Williamsburg had the biggest losses in occupancy during the recession, but it has also rebounded the most, the data showed.

In comparable markets in the country (like Asheville, NC, and Savannah, Ga.), Williamsburg had the lowest demand year-to-date and the lowest occupancy.

Yoshii stressed during her presentation that Williamsburg hotels need to raise their rates so they are more in-line with recent increases in occupancy. If hotels would raise their rates only 50 cents, they would generate about $500,000 in revenues, she said.

Karrie Keen, STR’s director of Convention and Visitors Bureau and Destination Marketing Organization operations, discussed supply and demand and other lodging trends. Keen said the average daily rate across the country wasn’t trending up in correlation with inflation.

Yoshii said she expected this trend to be similar in the Williamsburg area, when comparing hotel rates with inflation rates.

Hess completed his Tourism Competitive Analysis Study at the behest of the Greater Williamsburg Chamber and Tourism Alliance. Read a previous WYDaily story on the report findings here.

He compared Williamsburg-area data and strategies to those of Orlando, Fla.; St. Augustine, Fla.; Asheville, North Carolina; Savannah, Ga.; Charleston, North Carolina; Virginia Beach; Hershey, Pa.; and Gettysburg, Pa.; which are all deemed somewhat-similar tourist destinations. The aim was to identify how successful each area’s tourism marketing is, what some of the strategies are to attract tourists, and how Williamsburg could emulate some of the successes.

At the meeting, Hess said he focused many of his slides on Asheville because it has had consistent growth in hotel sales. He said he traveled to the area with his wife to see what was so great about it, and though it was nice, “it ain’t any kind of Williamsburg,” he said. Compared to Asheville, he said, Williamsburg had much more to see and do.

He painted a virtual picture of the tourist who visits Williamsburg – a family person with a high income (about 52 percent of visitors to the area earn more than $75,000 per year) who stays more nights compared to other destinations.

“People come here with money and are willing to spend it,” Hess told the audience. “We need to take advantage of that.”

He also suggested the high number of nights visitors spend in Williamsburg is something to be capitalized on.

One of the problems with hotel occupancy is that many of these visitors are staying in timeshares, though, Hess said.

As far as what good things Asheville is doing that Williamsburg could learn from, Hess found that the area is well-marketed in part thanks to a tourism product development fund that uses a three percent room tax to fund a committee that decides how to draw visitors (very similar to the Historic Triangle’s Williamsburg Area Destination Marketing Committee, which decides how to use the local $2-per-night room tax to bring visitors).

The Asheville group, though, is made of up several hoteliers. WADMC only has one voting member from the hotel industry.

It’s an interesting group, Hess said, “because you’re taxing the people and then letting them make the decisions.”

Another positive aspect of Asheville’s marketing strategy is that “everything with them is a metric,” he said, which means they expect measurable results. An example he gave was that Asheville’s group invested in a soccer complex that generated thousands of overnight visitors, which could be tracked.

“People are looking for value,” Hess also said to the audience. “This is going to be the name of the game for a while.” Williamsburg has many things to do that are free, something that he encouraged people to promote.

Hess also highlighted that Virginia Beach has had better occupancy rates compared to Williamsburg, and has been very successful with a recent push with sports marketing. He asked the crowd, “What should our relationship with Virginia Beach be? The more drivers we have, the better.”

Williamsburg currently shares almost 30 percent of visitors with Virginia Beach now, he said. That means travelers who visit the Triangle also stop at the beach and vice versa. Hess suggested Williamsburg work towards becoming a hub between Virginia Beach and Richmond, and try to pick up visitors who would like to stay in a central location and travel to nearby areas.

When asked what the first step would be for the Triangle when looking at how to imitate other areas’ successes, Hess suggested that Williamsburg develop its brand more clearly and better define its target market. The successful destinations each have a strong and well-understood brand that all local businesses support.

“I read a lot of Williamsburg bashing [in the press],” Hess said, “but I would rather market Williamsburg than any of these locations. We have a lot going for us. We have the product, now we need to execute” a marketing strategy.

During a question-and-answer session, Hess fielded some aggressive questions about how to improve visitation to Williamsburg.

One audience member asked bluntly if he thought the area needed a “top level leadership” change. Hess didn’t answer, other than to say that “there’s evidence to suggest we can do better.”