Hotel revenue soars double digits

2013-04-28T19:00:00Z 2013-05-01T16:13:30Z Hotel revenue soars double digitsJENNIFER HUFFMAN Napa Valley Register
April 28, 2013 7:00 pm  • 

Napa County hotel revenue topped $41 million in the first quarter of 2013, an increase of 11.7 percent from the same period last year, according to new statistics provided by Smith Travel Research.

Area hotels saw a 3.9 percent increase in occupancy during that first quarter, which reached 53.2 percent and a 4.3 percent increase in average daily room rate, which reached $188.31.

Revenue per available room rose 8.3 percent to $100.18 in the first quarter. This statistic is calculated by multiplying a hotel's average daily room rate by its occupancy percentage.

“It’s all good news,” said Clay Gregory, president and CEO of Visit Napa Valley, the county’s official marketing organization.

Gregory said he was especially pleased to see the increase during the first quarter.

A year ago, the Lake Tahoe area had a slow ski season, which may have driven more visitors to Napa Valley in the first quarter of 2012, he said. “People who normally have gone skiing came to Napa Valley,” instead he said.

Come first quarter 2013, “We felt that we may have a hard time matching” the previous winter’s hotel revenue. However, even with a stronger ski season this winter, “We were well ahead of last years numbers,” Gregory said.

He attributes part of the increase to the Napa County Tourism Improvement District (TID) lodging assessment being established more than two years ago.

Visit Napa Valley’s marketing efforts are funded by the TID. Created in 2010, it imposes a 2 percent assessment on the bill that county visitors pay for lodging. The money pays for visitor-oriented activities and to draw tourism to Napa Valley.

Among initiatives paid for by this greatly expanded budget, “We are working on bringing in visitors during the quieter time of the year.” These numbers show that it’s working, Gregory said.

The organization is forecasting 8 percent growth in hotel revenue for the fiscal year ending in June, the CEO said. “We will probably forecast a 5 to 6 growth rate for next fiscal year,” he said. That decline is somewhat to be expected, Gregory noted. “As the numbers get better and better, it gets harder to keep beating them.”

“I think that’s very healthy growth for the Napa Valley,” said Michael Palmer, general manager of the Meritage Resort and Spa.

At the Meritage, “We are up 17 percent year over year in occupancy and most of that is because of group business.” His average daily room rate is up double digits year over year, Palmer said.

Palmer noted that the first-quarter occupancy figures would be skewed because his hotel added 165 hotel rooms to the area just seven months before that. “That’s almost like adding another hotel to the market,” Without those extra rooms, occupancy would have been even higher, he said.

Group business is on the rise, Palmer said. “In the days of 2009 and 2010, people weren’t spending that money. They were being very cautious and careful.” Now planners are once again setting up sales meetings and other group business events.

Rick Swig agreed that the business market is driving much of the lodging business today. Swig is a hotel consultant, owner of two Napa valley lodging properties and a member of the Visit Napa Valley board of directors.

“The general national trend (is) more companies having meetings,” he said.

Swig also credited Visit Napa Valley’s efforts to draw visitors to the area. “Visit Napa Valley is now adequately funded and well-strategized and it’s paying off,” he said. “We’re are all seeing the result of those marketing activities. It’s all a very positive direction and the momentum is very good.”

Swig said there could be a demand or need for more hotels in Napa Valley? “I think you’re going to see that there will be some initiatives to grow some hotel rooms,” he said. “The problem will be getting those financed,” he said.

“The cost of building hotels in Northern California is significantly higher than other marketplaces. There are more financial barriers than there are business barriers.”

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