The Republican National Convention and championship runs by both the Cavaliers and the Indians weren’t enough to compensate for the glut of new available rooms.
Overall occupancy fell from 67.9 percent in 2015 to 66.0 percent in 2016. Occupancy has been hovering within about two percentage points for the past several years, but the 2016 mark is the lowest since 2011, when Cleveland hotels achieved only 60-percent occupancy.
The dip is almost entirely attributable to the massive building boom downtown. The publicly-financed jewel of the downtown hotel portfolio is of course the 600-room Hilton Cleveland Downtown, but the Kimpton Schofield (128 rooms) and the Drury Plaza (189 rooms) also came online in 2016.
And while average room prices rose by nearly $10 per night to accommodate the demand during specific time frames, the word from industry executives is that Cleveland “probably” overbuilt. Or at least that’s the short-term diagnosis.
“Longer term, the answer isn’t yet known,” a VP at hospitality consulting firm Hotel and Leisure Advisors told the PD.
Everyone nonetheless seems willing to concede that the numbers from 2017 will be tough to top. The RNC alone accounted for about five percent of the year’s total room nights. Still, we are instructed to be patient; we are told that we’ll certainly get back up to 2015 numbers, even if it takes awhile. We shouldn’t be skeptical or stupid — this is how the tourism industry works.
Nevertheless, Scene has been asking for years whether or not all these new hotels make sense, and whether or not the rosy projections might be a tad unrealistic.
Here’s Eric Sandy on the Hotel Cuyahoga funding debate back in 2013.
“After city leaders [in Baltimore] realized that they’d have a tough go at the convention business without a convention center hotel, they nailed down plans to fund the $301-million Baltimore Hilton,” Sandy wrote. “That was back in 2005, and the hotel hasn’t produced dick for the city, nor has it been able to efficiently pay down its debt service.”
And here’s a vision of the Hilton Cleveland Downtown in 2021.
This article appears in Jan 18-24, 2017.
Or …. “Cleveland Hotel Occupancy Remains Stable Despite Massive Building Boom!” As the article states… a drop of 1.9% is not much different than the ups and downs of the past several years
Let’s just talk about room nights for a second: did they go up in 2016? I have to think they must have. If you dump a ton of rooms into the market, your occupancy RATE is of course going to drop. While it’s right to be concerned about the occupancy rate, it’s really important to consider whether total room-nights are increasing year over year. It’s also important to consider whether events like the World Series and the NBA Finals filled the hotels in spite of extra capacity and whether rates appreciated at those times. The most important thing going forward is whether the hotels downtown will remain profitable at these occupancy rates…and I have yet to see you so any solid reporting on this. It’s easy to say they may have overbuilt, but what occupancy rate is profitable in Cleveland??? Anyone opening or renovating a hotel has to have dug into this and come up with their own projections.