Hotel occupancy in downtown Cleveland drops for the second year in a row

H&LA President, David Sangree weighed in with The Cleveland Plain Dealer on the occupancy drop in Cleveland hotels in 2017:

Published by: Susan Glasser/The Plain Dealer

Published date: January 2018

Hotel occupancy in downtown Cleveland dipped for the second straight year, a result of the hotel building boom leading up to the Republican National Convention.

Occupancy dropped from 67.2 percent in 2016 to 66.5 in 2017 at the 25 hotels in downtown Cleveland and University Circle. Nationwide, hotel occupancy increased  modestly, from 65.5 percent to 65.9 percent, according to STR, a data firm that tracks travel metrics.

David Sangree, president of Cleveland consulting firm Hotel & Leisure Advisors, put a positive spin on the drop in occupancy, saying: “That decline is actually far less than I feared it would be.”

In the last two years, downtown Cleveland has added nearly 1,200 new hotel rooms – a 25 percent increase — that some in the tourism industry feared could not be absorbed, at least not quickly.

“It could have dropped a lot more,” said Sangree. “That’s actually a staggeringly positive statistic.”

But there is room for concern: Hotel occupancy in the Cleveland suburbs dropped more substantially than downtown, suggesting that downtown’s new hotels are poaching business from outside of the city center; and the average room rate for downtown hotels dropped in 2017, indicating that hotels have had to decrease their prices to boost occupancy.

Occupancy in the Greater Cleveland area, which includes Cuyahoga and five other counties, fell 2.4 percent to 59.7 percent in 2017. The average cost of a downtown hotel room in 2017 was $144.89, down from $153.03 in 2016.

Sangree said the RNC – which filled hotels for nearly a four-week period in the summer of 2016 – probably caused a spike in the annual overnight rate. Even so, he said, new Cleveland hoteliers were probably hoping for higher rates in 2017.* Greater Cleveland includes six counties in Northeast Ohio: Cuyahoga, Lorain, Medina, Lake, Geauga and Ashtabula.

“When you open a new hotel, you would hope that ADR [average daily rate] would grow,” he said. “With the cost to build these new hotels, I’m sure their owners were expecting an increase in room rate.”

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