Oil leak clouds long-term future for hotels, conventions

Posted on: July 6 2010
"...group convention reservations over the next several years are less certain and more sensitive to the whims of conservative convention bookers..."

June 29, 2010
Matthew Davis, Contributing Writer

New Orleans hotels face long-term uncertainty related to the Gulf of Mexico oil leak, with most operators in the French Quarter and Central Business District reporting few cancellations and an optimistic leisure and commercial business picture through the fall.

But group convention reservations over the next several years are less certain and more sensitive to the whims of conservative convention bookers according to the New Orleans Metropolitan Convention and Visitors Bureau. And there is no way of measuring the lost opportunity from convention and leisure visitors choosing another destination over New Orleans, tourism industry officials say.

The CVB tracks hotel bookings in almost 11,000 rooms at 22 hotels throughout the city in its core booking report. A copy of the CVB’s June core booking report obtained by CityBusiness shows higher occupancy for May compared with last year, up from 130,000 to 185,000 rooms. But June was softer, with room bookings down to 122,000 from 166,000 a year ago.


It is difficult to compare individual months on the report, however, because of the flux in citywide convention bookings. July is only down slightly on last year, according to the report, at 161,000 bookings, down from 164,000.

The core report is kept confidential amongst CVB members, and monthly statistics in isolation are unlikely to present a coherent sales picture.

“We were all running very good occupancies in the first five months,” said Jill Guido, Royal Sonesta sales and marketing director. “And then June, no, we won’t be seeing that. I think that says enough right there. Now on the other hand, July looks very good, very promising.”

Over the long term, the picture is less clear.

Convention bookings are confirmed as far as 10 years in advance, and bookings for 2010 and 2011 still show a slump dating back to 2006 and 2007, when conventions were being booked after Hurricane Katrina, said Nikki Nicholson, the CVB’s vice president of convention sales.

“In 2006 and 2007, when we normally would have been booking for 2010 and 2011, brand impairment was so bad that organizations bypassed New Orleans for destinations that they perceived to be less risky,” Nicholson said.

This anti-risk sensibility coupled with voluntary leadership positions that usually run for a single year mean that the destination decisions for future conventions lie in the hands of people who are disposed to choose a safe place, Nicholson said.

The professional associations that typically book conventions in New Orleans typically must meet every year but are “very risk averse,” she said. Most rely on their annual conventions as the economic engine for their budget, and some associations can have their entire mission put at risk if convention attendance is low.

“The consequences of these decisions are staggering,” said Nicholson. “It can take years to attract and confirm conventions to the city but virtually no time to lose them.”

Convention bookers are also highly communicative, sharing experiences and impressions with one another on a regular basis. This means booking trends tend to be highly sensitive to any spooks in the market.

“You don’t know how many times the phone’s not ringing,” Nicholson said.

In the meantime, hotels report the situation in the Gulf has not resulted in any widespread cancellations. Major events on the horizon offer hope for July and beyond.

Andrea Thornton, sales and marketing manager at Hotel Monteleone, said the accident has provided new business but declined to disclose occupancy rates at the 600-room hotel.

“It’s been government, engineers, attorneys or that type of thing,” she said. “People who are coming down to help with the spill.”

At the Holiday Inn French Quarter, sales director Tunney Barrett said June occupancy at her 223-room facility was better than her expectations of 60 percent. The upcoming citywide National Education Association convention and Essence Music Festival will keep rates around 70 percent in July, she said.

Not all hotels report such strong business, however, and some have noticed a slight dip in June. Only half a dozen leisure travelers have canceled reservations at the InterContinental hotel on St. Charles Avenue, citing the disaster, sales and marketing director Andrew Done said.

His business trade has been particularly hard hit for the 479-room hotel.

“We’re seeing the big impact … because we’re in the Central Business District, and we’re near the oil and gas companies around us. The reservation pace for a lot of those companies is significantly down,” Done said. “That’s where we’ve seen a big drop off. That’s about 60 percent down.”

A reduction in the wholesale market of international travelers coming to New Orleans is also a concern at the InterContinental. These block bookings made by package holiday agencies from overseas markets such as Europe, Australia, and Asia are 20 percent down, Done said.

“They book a little bit further out usually, anywhere between 30 to 90 days out, and (prices are) starting to get a little bit reduced.”