Mixed-Up Market in the Midwest
The Midwest is often overlooked when discussing hot hotel markets. New York and Los Angeles usually get all the headlines, but led by Chicago, the middle of the country has also thrived during the past five years. As national numbers—in occupancy, daily rates, RevPAR, hotel sales and development—have begun to flatten, or worse this year, what's the pulse of the lodging industry in the heartland?
Monday, Illinois Gov. Rod Blagojevich announced the state tourism industry continued to grow at a record pace last year. Chicago reached a new all-time high with 45.14 million visitors, up 2.2 percent, and business travel was up 8.7 percent. Leisure travel declined by five percent, down from nine percent growth the year before, but Illinois' 3.5 percent increase over the two years was ahead of the national growth rate of 1.8 percent.
Chicago's hotel industry started the year "with an absolute dismal performance," says Ted Mandigo, the director of TR Mandigo & Company, a consulting company based in Chicago. "Occupancy was down 10 percent in January and February." The drop, partially because of the economy, was mostly due to bad weather, Mandigo says. "March came back a little and April was very strong."
Early reports are mixed as the summer season just kicked off with Memorial Day. Gas prices, and news of a recession, continue to increase daily. Business travel is starting to slow as companies tighten their belts, but many Midwest resorts expect to do well with leisure travel as people stay closer to home for vacations.
"Business in general is good, but a bit schizophrenic," says Bob Habeeb, president of First Hospitality Group, a hotel development and management company focused solely on the Midwest.
Most industry insiders agree now is a good time to buy and develop, with cap rates climbing, but finding the money to do that is the challenge with the current credit crunch.
"It's really tough to get a whole deal financed right now if you're looking for a traditional mortgage-equity mix," says Hans Detlefsen, director of HVS Global Hospitality Services in Chicago. "Those standards have changed drastically in the past 12-18 months."
Indianapolis and Cincinnati are two markets that have seen a wave of recent development as part of their urban revitalization. Even Cleveland has had major deals recently announced—both a Hotel Indigo and a 1 Hotel & Residences are planned for the city.
What's ahead for the rest of the year? The buzzwords are clearly "cautiously optimistic," as mentioned by more than a few hoteliers based in the Midwest. For a better understanding of the climate in the Midwest, Lodging Hospitality is hosting the Midwest Lodging Investors Summit July 14-16 in Chicago. Investors and hoteliers from all segments will come together to discuss the state of the industry. For a more complete analysis of the Midwest lodging industry, check out the July 1 print issue.
Want to use this article? Click here for options!
© 2012 Penton Media Inc.
Acceptable Use Policy blog comments powered by Disqus
Most Recent
Career Center
| Enter Keyword(s):
Enter a City: Select a State: Select a Category:  |
|
