Hotels optimistic amid economic downturn

Nov 29, 2008 (The Bakersfield Californian - McClatchy-Tribune Information Services via COMTEX) -- MAR | Quote | Chart | News | PowerRating -- Dismal forecasts for the U.S. hospitality industry have not crushed Bakersfield hoteliers' hopes that visitors will pack city hotels in 2009.

Despite general agreement that next year will be the local industry's toughest since 2001, some tourism executives hope the city's relatively low hotel room rates will prove attractive through the slow economy.

Others are worried that inexpensive rooms send the wrong message, and they are instead banking on recent investment in high-end lodging in Bakersfield, new leadership at the city's convention and visitors bureau, and strong demand by foreign tourists and other groups with an incentive to stop here.

Hotels' efforts to generate more business locally have strong implications for the local economy. Kern's hospitality industry, which includes restaurants and other businesses that serve visitors, accounted for nearly 14,000 jobs in 2006, according to the Bakersfield Convention and Visitors Bureau.

Already Bakersfield's hospitality industry has begun to cool. The citywide hotel occupancy rate slipped to 57 percent in September, down from 60 percent a year before, according to Tennessee-based Smith Travel Research. Over the same period, however, Bakersfield's average room rate rose to $65.25 a night from $62.98 -- an increase of almost 4 percent.

California's average room rate went up by about the same margin over those 12 months to $123.84 in September. But the decline in statewide occupancy rates was a bit steeper, falling to 65.3 percent from 70.1 percent, the research company noted.

TOUGH YEAR AHEAD

Looking ahead, industry observers have had little good news to report. The president of Smith Travel Research, Mark Lomanno wrote late last month that economic uncertainty has paralyzed the U.S. hotel industry, and that no "significant rebound" will occur until well into 2010.

The same target recovery date was cited by another major hotel researcher, Atlanta-based PKF Hospitality Research, which forecast that even though U.S. hotel room demand would only decrease by 1.5 percent next year, hotels' profits would fall by close to 8 percent nationwide.

Several local hoteliers say they are bracing for a tough 2009.

"Looking forward, Bakersfield certainly is not going to be immune from what's happening in the overall market," said Bill Murray, general manager of the DoubleTree Hotel Bakersfield on Camino Del Rio Court.

And yet he and others expressed optimism that Bakersfield's tourism industry will fare better than that of other cities.

Certainly the city's comparatively inexpensive room rates have the potential to draw cost-conscious travelers, Murray said.

That's especially true in this economy, as is the lure of Bakersfield's central location within the state, said Don Cohen, the head of Bakersfield's tourism bureau.

"I think a weak economy favors us, and I really feel like if we feel the squeeze, every other city's going to feel it more dramatically," Cohen said.

MIXED BLESSING

But some fear that the city's low rates could lead to a reputation as a cheap destination, and that this could limit its capacity for hosting large, lucrative events that can mean thousands of hotel room bookings citywide.

So said Eric Roiko, general manager of the Bakersfield Marriott at the Convention Center, which recently opened in place of the former Holiday Inn Select.

"I like to think (Bakersfield) is more of a value area as opposed to a cheap area," he said.

The Marriott itself represents something of a bright spot in the local hospitality industry. This is not only because the Marriott name brings weight to the market, but because its owner has invested in substantial renovations there.

The hotel's very presence will allow others to raise their room rates, said Brett Miller, who leads a development partnership working to reopen the Padre Hotel as a boutique hotel in the first half of next year.

"They (the Marriott's leadership) are going to drive rates for the town, so it makes it easier for us to raise rates as well," said Miller, whose renovation project, like the Marriott's, has earned praise as potentially drawing attention to Bakersfield as a destination for people who want to stay in an upscale hotel.

BUREAU OVERHAUL

Another often-cited cause for optimism is the change of direction at the Bakersfield Convention & Visitors Bureau.

Last year the hotel bed tax-supported marketing organization became a city department after undergoing disruptive executive changes that prompted board members to take a hands-on role inside the organization. The transition resulted in the dismissal of sales people and a months-long period without any staff reaching out to meeting planners, leading some hoteliers to question the city's ability to manage the bureau.

Earlier this year Cohen filled the sales positions and took other steps to position the organization to compete more aggressively for conventions and other events.

"We see that (bureau staff) are actually working and not just settling down," said bureau board member Mike Raja, general manager of the Days Inn on Real Road.

There is also hope that Bakersfield will continue to attract individuals and groups who come here for strictly geographic or business reasons.

The city remains a hub of oil industry activity, for example, and as such it lures executives in town for business meetings, hotel executives said.

In addition, large numbers of foreign tourists are staying in Bakersfield as a stopover in their travels between Las Vegas, Sequoia National Park and San Francisco, said Michele Liskiewicz, general manager of the Clarion Hotel Bakersfield on Rosedale Highway.

While she attributed some of the foreign tour business to the relative strength of foreign currencies, Liskiewicz said the trend demonstrates how changes in the market can aid local tourism.

"What used to bring people to Bakersfield," she said, "might not be the same reason they're coming now."

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