Occupancy numbers and room rates for Atlanta hotels are on the rise, but the rebound has been long and slow, and the industry still hasn’t caught up with its peak 2007 levels.
Leading the way have been hotels in the Buckhead and downtown sub-markets, which have beat 2007 levels this year, industry leaders said. But south metro properties and airport hotels, one of the most critical sub-markets because of their proximity to Hartsfield-Jackson International Airport, have struggled and have pulled the overall averages down.
“There is still some uncertainty out there,” said Mark Vaughan, executive vice president and chief sales officer of the Atlanta Convention & Visitors Bureau. “Some people are stilling holding back on decisions.”
The health of metro Atlanta’s hotel business is important because it’s a leading indicator of the area’s $11 billion hospitality industry. How it fares has a profound impact on regional coffers, including restaurants, tourist attractions and retail.
Many had predicted the industry would have fully recovered by now. But while each quarter since 2009 has posted improving results, none were enough to meet the forecast and reality set in that things were not recovering as quickly as hoped.
Mark Woodworth, president of PKF Hospitality Research, which studies the lodging industry, said the problem has been a more anemic-than-anticipated economic recovery — especially in Atlanta. Because the economy has been slower to regain its footing than usual after a recession, it has been harder to predict a rebound using historical guidelines.
The latest projection is that metro Atlanta’s hotel occupancy and average daily rate should be near or above their 2007 peak by 2014, according to PKF. Occupancy in 2014 is expected to be about 62.3 percent while the average rate will be $98.36. Occupancy in 2007 was 62.8 percent and rate was $90.34.
There are reasons to be hopeful. Eighteen of the 22 citywide conventions held in metro Atlanta in 2012 saw increased attendance over their most recent gatherings. Citywide conventions are meetings so large they fill rooms over a number of hotels.
The area is expected to get a boost in 2013 when the NCAA Men’s Final Four basketball tournament is played in April at the Georgia Dome.
Niles Harris, general manager of the Sheraton Atlanta, said Atlanta’s slow-but-steady recovery makes sense to him. He said it would be unrealistic to expect a quick turnaround from the worst recession since the Great Depression.
Lew Fader, vice president of operations for InterContinental Hotels Group’s Canadian and eastern United States division, is bullish the recovery will be complete in two years. For him, a leading indicator has been the uptick in business travelers staying at InterContinental in Buckhead, the company’s Atlanta flagship.
IHG, whose brands include Holiday Inn, Staybridge Suites and Crowne Plaza, is based in England, has its Americas headquarters in Atlanta.
When the economy died, the leisure traveler continued to book rooms, but businesspeople disappeared, Fader said. As the purse strings at corporations have loosened, business travelers have returned, increasing group business at InterContinental Buckhead 22 percent in 2012 over 2011.
“Right now, we’re down 1.7 percent compared to 2007 and that’s nothing,” Fader said of all metro Atlanta hotels. “We could make that up by 2013.”
Mandarin Oriental General Manager Robert Lowe agreed.
“Having recently opened in Atlanta, we see a lot of opportunity for growth, especially in the leisure and entertainment markets,” he said. “The (recent) SEC Championship Game was a very strong weekend for us commanding high rates and high occupancy.”
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