Hotel Hiatus

January 28 2009 | Latest News
by Richard A. Webster, New Orleans City Business

After the 504-room Roosevelt Hotel opens in June, it will likely be years before another major hotel opens in New Orleans.

The renovation of the 1,184-room Hyatt Regency is on permanent hiatus because of the credit crisis. And that’s not necessarily a bad thing, said Bill McCreary, New Orleans Hotel and Lodging Association president.

At present New Orleans cannot support several thousand additional hotel rooms. The recession and the relatively soft convention schedule have kept occupancy rates hovering between 60 percent and 70 percent.

But that doesn’t mean there should be a moratorium on future hotel projects, McCreary said. If construction on the Hyatt broke ground today, it most likely wouldn’t be ready to open for another two to three years. By that time, the economy and convention business most likely will have rebounded, putting the city in good shape to support several new hotels.

“In the future we’re going to have the opportunity to attract business that will fill those additional rooms,” McCreary said. “So while we may not be able to support them now, we need to keep moving forward. If we want to continue to compete for convention business we’re going to need these big hotel projects.”

After the Roosevelt opens, New Orleans will have 34,000 to 35,000 hotel rooms compared with 38,000 before Hurricane Katrina, according to the Greater New Orleans Hotel and Lodging Association.

Despite the current economic downturn and a soft tourist market, the Roosevelt shouldn’t struggle, said Andrea Thornton, director of sales and marketing of the Hotel Monteleone.

“The Roosevelt is a unique property. It’s historic, and I think we should be able to sustain it,” Thornton said. “The city looks a lot better than it did a few years ago. We got a lot going for us.”

Business was slow at the end of 2008 because of the recession and high gas prices, Thornton said.

“Our business used to be evenly split between corporate groups and leisure travelers, but then after Oct. 15 it was like someone pulled the plug on leisure travel.”

This month, however, the Monteleone experienced a surge in leisure business that may bode well for the coming months.

“We just picked up over 500 leisure reservations in last seven days,” Thornton said. “The big thing is that gas prices have really tailed off and that affects us because if people are not paying high heating fuel costs in the Northeast and Midwest, they more likely to come here to escape all of that cold and snow.”

Mark Wilson, the Roosevelt’s director of sales and marketing, said the market would struggle to handle additional hotel openings this year but in the future they will be vital to the city’s standing as a premium destination. He would like to see the construction of a major hotel adjacent to the convention center.

“To have a 1,200-room hotel next to Phase 3 of the convention center makes a lot of sense and would give meeting planners another headquarter option. Having more alternatives to the Sheraton and Hilton would prevent us from losing business to Chicago, Las Vegas and Orlando.”

Kurt Weigle, Downtown Development District president and CEO, said right now is the time to begin planning for additional hotels.

“I think the rooms that we could be constructing now would be looking to the day when we get closer to our peak number of tourists back. Based on today’s numbers, we can’t support more hotel rooms. But these projects won’t come online for several more months, and we show positive trends returning and that’s what we should be expecting.”