Room rates decline in Tahoe, Washoe

Hotels in the Reno-Tahoe area are slashing rates in an effort draw visitors.

Montbleu Resort, Casino and Spa at South Lake Tahoe, for instance, advertised $39 rooms during June.

Midweek rates for the Peppermill Hotel Casino Spa's Montego Bay wing are running $49 through mid-August. Tourists can stay at the Club Cal-Neva for just $34. Mid-week room rates at Terrible's Sands Regency are just $29, while mid-week rates at Circus Circus Reno currently start at $39.

Jay Thiel, general manager of Terribles Sands Regency, says the drop in room rates has helped fill rooms. Occupancy is up from last year, but occupancy has been boosted as well by the three-month long U.S. Bowling Congress women's championship in Reno.

July occupancy at Terribles Sand Regency is tracking slightly ahead of the same month the prior year, but at the sacrifice of the rate, Thiel says. And weekend occupancies have not dipped as much as mid-week numbers. Mid-week rates at the Sands are down 10 to 12 percent from 2008.

"It is a consumers' market. You can find all kinds of deals wherever you look," Thiel says. "With a casino property, you are better off with somebody in a bed than without."

Mike Woods, a specialist in lodging properties and founder of Sierra Realty Group in Genoa, says that deeply discounted room rates at gaming properties draw business away from non-gaming properties. That's led to a sharp reduction in hotel sales.

"Casinos generate income from two sources. They need the bodies." says Woods. "They have to have people. It makes it a lot tougher for non-gaming properties."

Woods says occupancy and revenues at many non-gaming properties in the region are down about 25 percent for the first two quarters. They continue to draw their regulars - folks who come back to the same lodging property every year - but struggle to woo occasional or one-time visitors.

Business-class hotels also find themselves embroiled in the rate wars.

Sushil Patel, who owns two business-class hotels in south Reno and the Days Inn, Quality Inn and Suites and an independently branded property at South Lake Tahoe, says his properties have held their own despite deep discounts at nearby casinos.

"We have dropped rates because of tourism activity in general, but we are still holding rates substantially higher than the gaming properties," Patel says. "We had a good June - all three properties held numbers from last year - and July is looking not too bad as well."

The declines in rates come as occupancies in Washoe County and Lake Tahoe hotels have experienced sharp declines. Tourists visiting South Lake Tahoe in April rented 26,405 rooms for the month. That's the second-lowest total this decade, trailing only the 19,654 rooms rented in November. The April figure represented a 17 percent decline from year-earlier figures - and it's off 54 percent from the start of the decade. Overall, occupancy rates on the California side of Lake Tahoe have dropped 10 percent for the fiscal year.

Nevada properties at Lake Tahoe haven't fared much better. April room rentals were down just 6 percent from a year ago, but room rentals declined 17 percent in March and 23 percent in February from the previous year's totals.

And the decline in tourists staying in Tahoe hotels is reflected in the area's declining gaming win for May: South Lake Tahoe was down 25.5 percent, while North Lake Tahoe dipped nearly 19 percent. Properties in Washoe County have struggled to fill rooms as well. Room nights in May declined nearly 7 percent from a year ago, and average room rates fell to $73 compared to $77.71 for the previous year.