Economy tanks hotel occupancy, room prices|Owners look for boost from tourism

Published 12:00 am Sunday, April 18, 2010

Along with the lagging economy, the addition of 500 hotel rooms in Vicksburg over the past year has led to the lowest occupancy rates seen in the area in at least three years.

With fewer than half the city’s approximately 2,500 hotel rooms filled on average each night, some smaller motel operators have begun advertising rates as low as $25 a night.

While most hotel operators said they expect rates to creep back up over the next few months, there is skepticism that rates will ever return to averages of $80 a night that were common less than two years ago.

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“Everyone is negotiating, and everyone has had to cut rates,” said Paul Patel, regional director of operations for Southern Hospitality Services, which owns and operates four hotels in Vicksburg. “We’ve cut ours by probably 20 to 30 percent.”

Before the construction of six hotels in the area beginning in the summer of 2008, many in the industry said the days of $40 hotel rooms in Vicksburg were over. Occupancy and average daily rates, as reported to Smith Travel Research, peaked in September 2008, with 79.9 percent of rooms filled at an average of $81.50 a night.

Since, both figures have tanked — bottoming out in December 2009, with the occupancy rate at 38 percent and the average daily rate at $69. The most recent numbers, from February, show occupancy rates recovering to 49.4 percent, and the average daily rate holding steady at $69.

Julie Ford, sales and marketing director for MY Hospitality Services, which owns and operates five hotels in the city, said March and April numbers have been more promising. With the tourist season shifting into high gear, Ford said she doesn’t foresee motels continuing to advertise $25 or $30 stays much longer.

“I expect those to go away soon,” Ford said. “It’s beginning to pick up very quickly — sooner than expected — and I expect us to see even more gain over the next three months.”

Like the rest of the market, MY Hospitality Services properties — which include the Wingate by Wyndham, Motel 6, Fairfield Inn, La Quinta and Days Inn — saw significant declines in occupancy in the last quarter of 2009, said Ford. While MY Hospitality properties were able to hold rates steady, Ford said more incentives were offered in an attempt to keep rooms filled.

“We had to get very creative,” said Ford, who declined to specifically outline any incentive packages due to the tight competition. “We’ve been offering a lot of extra things, because once you begin lowering rates it’s very hard to bring them back up.”

Patel said he expects only marginal hikes in rates in the coming months, but doesn’t think average rates will see their way back to the $80 mark anytime soon.

“They’ll probably rise a little bit, but I don’t think there’s any way we’ll get back to where we were even a year ago,” said Patel. “Everyone is getting used to negotiating, and a lot of people know they can get a good deal if they ask for it.”

While the addition of new rooms has certainly aided the slide in occupancy and average daily rates locally, Patel said the economy is still hurting the industry across the nation.

“We have hotels in markets that haven’t had additional rooms added, and we’ve seen numbers decline there, too,” said Patel. “We’re getting hit here from both sides, and we would still be affected even if we didn’t have the additional rooms, but I don’t think quite as much.”

In addition to the city’s 32 motel and hotels, Vicksburg is also home to 14 bed and breakfast inns that have about 100 rooms collectively. No other hotels are under construction currently, and plans for two additional properties have been scrapped over the past year.

Contact Steve Sanoski at