The major growth is over, but the Vicksburg hotel market is nonetheless struggling through some growing pains.

With the recent opening of the Candlewood Suites on South Frontage Road, the number of hotel rooms in Vicksburg has grown by 25 percent over the past year — a growth rate five times larger than the state industry average. However, the average hotel is now little over half full, whereas a year ago they were enjoying occupancy rates nearing 75 percent and were getting about $10 more per room.

“Business is slow, and I think that’s due not only to the influx of rooms but obviously the overall economy as well. We’re bracing for the winter months to be pretty bad,” said Paul Patel, regional director of operations for Southern Hospitality Services, which operates four hotels in Vicksburg, including two built since last summer.

Six hotels have opened in Vicksburg since this time a year ago, adding about 500 new rooms to the 2,000 already available in the city’s 26 other hotels. Vicksburg is also home to 14 bed and breakfast inns that have about 100 rooms collectively. No other hotels are under construction, and it appears plans for two additional properties have been scrapped.

While Southern Hospitality Services and other hoteliers have thus far been able to keep from reducing their staffs, they regularly offer more deals on hotel rooms to keep their properties at least half full.

“If we don’t deal, the next hotel will,” said Patel. “We have to deal. The consumers pretty much know that we have a lot of hotel rooms available now and they’re being very savvy. We’ve come down probably $15 to $20 on our rooms.”

At the new Candlewood Suites — which opened Aug. 25 — operations manager Jesse Kane said the business strategy is fairly simple: what makes the property different is what will make it more successful than its competitors. Targeting extended stays, all of its 83 rooms are suites with fully stocked kitchens. Along with an indoor pool, it offers guests an outdoor gazebo with gas grills, a mini-mart, exercise room and complimentary laundry facilities.  

“We’re so different than anything else you have in Vicksburg,” said Kane, noting the hotel is also pet-friendly. “By offering such a different product we really feel we’ll do well.”

Occupancy rates in July increased to 65.7 percent — the strongest month of the year thus far — as reported to Smith Travel Research by 14 hotels. Average daily rates were at $72.36 for the month. Year to date, occupancy in 2009 is at 56.9 percent and the average room has gone for $70.93. Linda Hornsby, executive director of the Mississippi Hotel and Lodging Association, said those numbers are still good compared with the rest of the state.

“Occupancy in Vicksburg really hasn’t slipped any more than in any other areas of Mississippi. In fact, the decline has been less than in many areas,” she said. 

Occupancy rates in Vicksburg have fallen by about 10 percent through July, compared with the previous year, right in line with the 10 percent slide seen on the national scale. Other regions in the state, however, have seen declines as high as 14 percent, said Hornsby.

“I think it has more to do with the overall economy more than anything else,” said Hornsby. “There’s going to be some hunkering down and some lean times, but I think we’ve just about turned the corner. I think spring will be very telling, and I think we’ll start to see the light at the end of the tunnel.”

Wingate by Wyndham General Manager Marty Crevitt said he’s optimistic spring will mark a turnaround in the general economy and local hotel industry. He’s hoping several large construction projects in the area will go from the planned to production stages to boost overnight stays once again.

“It’s hard to know exactly what to expect, but what we’re hoping for now is that some of the big things on the books — the Homeland Security building on (U.S) 61 South, the expansions at ERDC — we’re hoping those will happen in the coming year,” he said, adding Wingate has been offering 15 percent off for stays three nights or longer. “If the Grand Gulf (nuclear power plant in Port Gibson) would kick off, that would be the real deal.”

Hornsby said the Vicksburg market benefitted greatly by pipeline and other contract workers who booked long stays in Vicksburg in 2007 and 2008, but noted many of those workers left the area around the same time many of the new hotels were being built. Occupancy rates in Vicksburg were more than 5 percent higher than the national and state averages in those years.

The economy has at least temporarily halted one plan for another new hotel in Vicksburg. Pete Buford, owner of Buford Construction, cleared a lot at South Frontage and Bazinsky roads last summer with plans of building a 54-room hotel.

“We’re not going to do it at this point,” said Buford. “It’s just the economy, period.”

Separately, a 93-room hotel being planned by local developer Jimmy Hamilton Jr. near the Windgate also has been scrapped. Hamilton died in April, and his son, Mark, said the project died with him.

Christie Kilroy, executive director of the Vicksburg-Warren County Chamber of Commerce, said inquiries about new hotel development have dried up over the past year.

“I have had a few calls from some people about purchasing existing hotels, which is pretty common, but I don’t know that any new hotels will be coming at this time,” she said.

A 3 percent tax is tacked onto every hotel stay in the River City. The Vicksburg Convention Center and Auditorium gets a 2 percent share of the tax, while the Vicksburg Convention and Visitors Bureau gets 1 percent, as well as a 1 percent share of food and beverage sales in the city. Neither group is facing an alarming drop in revenue from the collections, with the convention center anticipating flat revenue of $440,000 from the tax in the coming fiscal year. The VCVB, meanwhile, has budgeted for a slight decrease in collections.

“We anticipated there would be reduced revenue from the tax collections,” said VCVB Executive Director Bill Seratt. “Our restaurant collections are down as well in this scenario, but we don’t really know how much. The state tax commission does not break down the difference in collections between hotels and restaurants, but we knew both would be off due to the economy.

VCVB tax revenue eclipsed the $1 million mark in 2008, an all-time high, and is off by 6 percent for the year through July. Collections in 2009 likely will match those from 2007, when the tourism bureau netted about $977,000. In 2006, tax revenues totaled $883,000. Like the hoteliers, Seratt expects 2010 to bring a return to higher occupancy and daily rates, which should drive up tax revenues.

“After 2009 I think we’ll start trending up again,” he said. “That’s the hope, anyway.”

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Contact Steve Sanoski at ssanoski@vicksburgpost.com