It’s been a lot harder to find a hotel room in Atlanta, but that doesn’t mean operators have been able to raise rates accordingly.
For the fourth consecutive year, hoteliers have seen a drop in room rates -- the amount guests pay for an overnight stay -- according to numbers from the Atlanta Convention & Visitors Bureau. For the first 10 months this year, the average room cost about $128, down slightly from $129 last year and $140 in 2008.
Yet occupancy through October -- the most recent numbers available -- has held steady at 66 percent over the past two years. That’s a vast improvement from the low of 58 percent in 2009.
The room-rate travails are troubling to metro Atlanta’s $11 billion hospitality industry because it means less tax revenue going into city coffers and slimmer margins for lodgers. It also contradicts economic theory on supply and demand, the leaders said.
“When you build demand price should go up,” said William Pate, the convention bureau president.
Driving the downturn are business travelers who were less price sensitive before the nation’s financial collapse in 2008, but are now using discount sites for less expensive rooms. Also, fewer rooms have been booked for citywide conventions that take inventory off the market and drive up prices.
“Back when the market was really peaking in late 2007 and early 2008, high fliers like executives in financial services and bankers were willing to pay top dollar for a room,” said Mark Woodworth, president of PKF Hospitality Research. “Those travelers who were the least price sensitive during the good times haven’t returned.”
Kathleen Tagariello, owner of Buckhead Travel Partners, a corporate travel agency, said there are so many good deals on discount websites that her organization doesn’t book as many hotels for business people as it did in the past. That change comes as corporate travel has picked up considerably this year -- though the pace is still lower than it was in 2007 -- but business travelers are handling the hotel bookings more and more themselves.
“We want what’s best for our customers, and, if they can get a better deal elsewhere, we support that,” Tagariello said.
Gregory Pierce, ACVB executive vice president and chief financial officer, said he doesn’t expect room rates to catch up anytime soon, because the economic turmoil reset room rates at such a low rate.
“It will take us a while to dig out of that,” Pierce said.
