Does New Orleans need more hotel rooms?

Posted on: January 10 2012
"Adding more rooms will allow the city to attract bigger meetings, which will increase the annual number of tourists and conventioneers..."

Monday, January 9, 2012
Richard A. Webster, CityBusiness

In the past four months, New Orleans has added 1,359 hotel rooms with the reopening of the Hyatt Regency New Orleans in October and the opening of the Saint Hotel on Jan. 4.

The sidewalk in front of the Sheraton Hotel on Canal Street was busy over the weekend with guests in town for the New Orleans Saints playoff game and the BCS Championship.

Despite the increase, there were few rooms to be found last weekend when football fans flocked to the city for the Saints playoff game and the BCS National Championship featuring Louisiana State University.

Hotel occupancy in downtown New Orleans hit 99.8 percent, providing strong evidence that the city could support even more hotels, especially leading up to the 2013 Super Bowl, said Mavis Early, executive director of the Greater New Orleans Hotel and Lodging Association.

“You don’t want to dump 3,000 new rooms into the market all at once, but having an additional 1,500 rooms this year would not be bad,” Early said.

In 2004, when 10.1 million people visited the city, there were 39,000 hotel rooms in the greater New Orleans area, according to the Hotel and Lodging Association. There are currently 36,600 rooms, and nearly 8.3 million people visited the city in 2010. Final visitor numbers for 2011 are not yet available.

Adding more rooms will allow the city to attract bigger meetings, which will increase the annual number of tourists and conventioneers, Early said.

The city will eventually need to add to its hotel inventory, especially if it meets its goal of attracting 13.7 million visitors by 2018 as called for in a master plan the local tourism industry published two years ago. But now is not the time, said Jeff Anding, director of convention marketing for the New Orleans Metropolitan Convention and Visitors Bureau.

Last year, hotel occupancy through November was 65 percent for the region and 65.7 percent downtown. Before the city considers new construction, it needs to push those numbers north of 70 percent, where they were before Hurricane Katrina, to ensure the long-term economic health of existing hotels, Anding said.

“The world has changed in last six years,” he said. “More competition has come on board. We had an oil spill Click here to find out more!
and an economic downturn, and all of that has contributed to a change in the marketplace we all have to exist in now. There is not a simple solution for getting back to where we were.”

The only construction scheduled in the local hotel market for 2012 is a $15 million expansion of the Drury Inn on Poydras Street that will add 60 rooms.

The primary focus of the tourism industry is not adding hotel rooms; it’s filling existing rooms during the historically slow months of August and September and on weeknights when there aren’t any conventions in town, said Stephen Perry, president and CEO of the NOMCVB.

“Right now, the number of rooms we have is perfect for the demand we have. Nationally, the hotel industry is really now just rebounding from the huge depression we had at the end of 2008 and into 2009,” Perry said. “The credit markets are still soft and hotel development is still a very complicated decision around the country.”

Before the recession in 2007 and 2008, the NOMCVB received three to four inquiries a month from people interested in acquiring or building hotels in New Orleans. That activity has all but disappeared, Anding said.

“We might get one every six months and it’s just a cursory thing, them testing the waters to see what the city looks like right now. That’s a real indicator of the economy right now,” Anding said.

While the CVB sounds a note of optimistic caution, some are more bullish.

John Williams, director of the University of New Orleans’ Kabacoff School of Hotel, Restaurant and Tourism Administration, said there’s no doubt the city will need additional rooms and should consider bolstering its infrastructure “fairly soon.”

The number of annual visitors to the city continues to increase each year, as does the number of accolades it receives from travel publications and travelers who consistently rank New Orleans as one of the top U.S. destinations. Next year’s Super Bowl — and possibly an appearance by the Saints in this year’s NFL championship game — will only increase interest in the city, Williams said.

“I don’t want to get on the bandwagon where all of a sudden we find ourselves with too many rooms, but certainly there is room for growth,” Williams said.

When there are several major events in town or citywide festivals such as Mardi Gras, there are not enough rooms, especially downtown, to support the number of potential visitors, he added.

“We are beyond capacity and that’s not a good situation and leads to potential bad experiences,” Williams said. “We need to address out future ideas of expanding the tourism industry, which has really shown resiliency. It’s a beautiful linear of growth we’ve been capturing since the storm.”