Business-class hotels suffering from reduced travel

Owners of new business-class hotels in Reno and Carson City say their properties have opened to lower than projected occupancy and room night rates as consumers scale back on business and leisure travel.

And those cutbacks are exacting a steep toll on the budget of the Reno-Sparks Convention and Visitors Authority, which derives two-thirds of its revenue from room-night taxes.

Jesse Singh, owner of the Holiday Inn Express on North Carson Street and the Holiday Inn Express on Market Street in Reno, which opened in October, says business at the Market Street property began much softer than expected but has increased 15 to 20 percent. He attributes the hotel's proximity to the Reno-Tahoe International Airport, as well as its quality and amenities, for the recent rise in occupancy.

Occupancy in the Carson City property is down as much as 25 percent, he says, with last year's opening of the Courtyard by Marriott at Casino Fandango on South Carson Street.

"They are lower this year and will be overall lower compared to last year because of the economic conditions," Singh says. "Everybody is down."

Sushil Patel, owner of the Hampton Inn and recently opened Staybridge Suites on Professional Circle in South Meadows, says occupancy is 10 percent lower than expectations at both properties, and are down as well as at his leisure-class offerings in South Lake Tahoe. However, he says, business should accelerate with the coming of the spring and summer months.

Patel says the low occupancy rates had led to fierce price competition among the area's many newer business-class hotels, such as the Hilton Garden Inn on Double R Boulevard and newly opened Hilton Homewood Suites on Kietzke Lane.

"Everybody is fighting to get whatever business is out there, and so the traveler really benefits right now because they see these lower prices," he says.

Singh says room rates at the Holiday Inn Express properties are about $10 lower than what he'd hoped for. And Patel says room nights at the Staybridge Suites and Hampton Inn are about $20 lower. Both owners say they have had to trim staff such as housekeepers in light of lower occupancy.

Heidi Berthold, public affairs coordinator for the Reno-Tahoe International Airport, says 600,000, or 12 percent, fewer passengers used the airport in 2008 compared to '07. Business travelers account for approximately 40 percent of passenger counts at the airport.

Singh says about 80 percent of his clientele are business travelers and that the leisure market has all but vanished at his properties, while Patel sees an uptick in leisure travelers at his properties.

"I think that is driven predominantly by bargains they are finding in the industry " hotels, airline and gas prices are coming down," he says.

Occupancy and room night rates are expected to remain flat through 2009 " bad news for the RSCVA.

Taxable room revenues in January dropped 19 percent from year-earlier figures, says Jill Stockton, RSCVA communications manager. The sharp decline in revenues prompted the convention and visitors authority to twice trim its budget in 2008, shaving a total of $7.5 million and laying off 15 full-time staff members in December.

The RSCVA is concentrating marketing efforts on California, Stockton says.

"Yes, the RSCVA is struggling in a down economy, but we have joined forces with our stakeholders and partners and have been able to find some success in getting tourists.

"We continually want to remind our neighbors in California that we are here, we are a good destination, and everything they can take advantage of is at a good value."