Inside the Bubble

For the most part, Tulsa businesses are still floating along in the protective bubble they’ve enjoyed since the national economy took a nosedive some months ago.
Our banks have remained stable, our housing market in tact, and, until recently, our hotels and convention centers were doing fine as well.
Just this month, Tulsa’s hotel industry began to see the affects of the recession, and its numbers are finally starting to resemble those of others in the country.
“In the first quarter of 2009, we have seen an impact from the economy, but it’s minor compared to what the East Coast and West Coast are going through,” said Lacey Lamm, general manager at Hilton Tulsa Southern Hills and president of the Tulsa Hotels & Lodging Association. “They’re seeing a much stronger impact. The numbers for hotels in Tulsa are still above what they were the same time last year.”
According to Suzanne Stewart, senior vice president of the Tulsa Convention and Visitors Bureau, which subscribes to hotel reports from Smith Travel Research, Tulsa saw huge increases in hotel occupancy in December of 2007 and January and February of 2008 because of the ice storm, which put displaced families and visiting utility crews in area hotels.
“Now the numbers are back down to normal,” she said. “Last year, we were at 58 percent occupancy for January, which is huge for January. This year, we were right at 50 percent. That’s a drop of 14 percent, but it’s higher than our normal average for January.”
Stewart said Tulsa’s occupancy rate, when compared by STR to other cities the size of Tulsa, was third highest, right behind Austin and Fort Worth.
“Everyone else was in the 40s,” Stewart said. “Oklahoma was at 46 percent, and Des Moines came in lowest at 40 percent.”
The CVB is mostly funded through hotel taxes, which are reported through the City and were made available to TBJ by the City of Tulsa’s Budget Director Pat Connelly.
In fiscal year 2005, hotels taxes amounted to $5,031,000 (the CVB gets 5 percent of that), and in 2006, they were $5,048,200. Year 2007 saw a jump to $6,052,000, and 2008’s number was $6,882,200. Connelly attributed 2008’s spike to August’s PGA Tour and the ice storm.
Through February of this year, hotel taxes have been $4,390,000, with a projected rate of $6,733,000, but Connelly said he wouldn’t be surprised if the actual number fell short of that.
“We’re going to see some decline,” Stewart said. “There’s no doubt about that. We’re already seeing some rate wars.”
Needs versus Wants
Lamm said hotels nationwide have been struggling to get their rates back up after they plummeted in 2001 following the September 11 terrorist attacks. Rates fell in an effort to keep people traveling, which Lamm said “was good for some travelers, but it really hurt the economy of the industry.”
“Since then, we’ve been trying to bring the rate back up (and we were able to in 2008),” Lamm said.
Part of that, she said, was because “area businesses were doing very well, so they had the finances to focus on corporate training and better products, which presented the need for hotels.”
While “corporate training is down a bit,” according to Lamm, “individual business travelers are still traveling.”
“There’s still movement throughout the city. And city initiatives, like the BOK Center, have helped that a lot. We’re very excited to be able to take advantage of things like that,” she said.
In fact, due to the BOK Center’s opening and the anticipated fall 2009 completion of Tulsa Convention Center’s major renovation and expansion, the CVB projects Tulsa needs 4,000 more rooms, with 2,000 of them within walking distance of the two event venues.
SJS Hospitality just broke ground on its Courtyard by Marriott-Atlas Life last week, and the 118-room hotel is expected to open in May of 2010.
The Mayo Hotel and Lofts, with 102 hotel rooms and 76 loft apartments, is expected to open this August.
Still, Stewart said, downtown Tulsa needs another full-service convention hotel, like the DoubleTree Downtown or Crowne Plaza. Because, while the Convention Center and BOK Center have been bidding on big acts for Tulsa, they can’t book them if they can’t provide adequate hotel space for the crowds they’ll bring in.
“Hotel developers wouldn’t look at us unless we were at 65 to 70 percent occupancy,” said Stewart. “(Building a large hotel in downtown Tulsa) doesn’t make sense today. But it makes sense five years from now.”
Macy Snyder, sales and public relations manager for the Mayo Hotel and Lofts, said she’s not worried about business for her brand new hotel, even in the midst of a recession.
“We plan to have a lot of business travelers during the week and, because of the event space we’ll have, we plant to have a lot of social events on the weekends and we expect those guests to fill the rooms on the weekends,” said Snyder.
“We’re not adjusting any of our plans because of the economy. We had the funding in place in May, basically just in time. If we were doing it now, trying to get funding now, it would be a totally different ball game. Otherwise, I wouldn’t say the economy has affected us at all,” Snyder said. “It helps a lot that we’re in Oklahoma. If we were in any other state, I’d be worried.”
Added Value
“We’re not at the point yet that we’re worried (about losing business to the downward-spiraling economy),” said Lamm. “Oklahoma always seems to weather the storm, and out industry certainly has weathered storms in the past. If we band together, we’ll get the industry through this and remain strong.”
Lamm said the THLA encourages hotels who are worried about their business not to drop their rates but to add value through amenities.
“The big focus has been on adding value to our guests. We obviously have a fiduciary responsibility to our owners to, as a business, generate as much revenue as possible. In an effort to entice travelers to stay at our properties, we’ve added value, whether it’s throwing in a free breakfast or Internet, or whatever, just to give customers a little more bang for their buck,” said Lamm.

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