Lodging revenue in Napa County

Napa County hotel revenue reached record highs in the 12 months leading up to June. This is an artist image of a Cambria Hotel to be built on an empty lot at 320 Soscol Ave., opposite a Hawthorn Suites on the north side of Tulocay Creek.

Submitted graphic

Tourism remains strong in Napa County, with lodging revenue hitting an all-time high of $408 million -- an increase of 7.8 percent -- for the 12 months ending June 30, according to Visit Napa Valley.

At the same time, the average daily room rate went up 5.4 percent, from $300 to $316, with occupancy virtually unchanged at 73.3 percent. 

“We had a very good fiscal year,” said Clay Gregory, the CEO of Visit Napa Valley.

“We projected a revenue increase of 4.5 percent and it was 7.8 percent -- well above what we projected -- which we are very happy with and the lodging community is very happy with,” said Gregory.

David Shipman, a hotel consultant who is also on the Visit Napa Valley board of directors, said marketing efforts by Visit Napa Valley and lodging properties are paying off.

“There has been a dedicated effort to make tourism and hospitality something special here and it’s worked,” he said.

In related news, the number of visitors to the Napa Valley rose 6.3 percent from 2014 to 2016, from 3.3 million to 3.5 million, the agency reported.

During the same time, the total amount of tax revenue that Napa County received from transient occupancy tax and other visitor related taxes rose 25 percent.

“We are managing tourism in a strategic manner,” Gregory said. “We are not overrunning the place with massive increases of numbers of people.”

Instead, wineries “are being smarter about the experiences they are offering. People are spending more time and money” in the Napa Valley.

“There are more restaurants, more activities,” more things to do, said Gregory. “The government and the community is benefiting from that.”

While some may wonder why occupancy isn’t rising along with room rates, Gregory explained that Napa County hoteliers lean toward driving average daily room rates versus occupancy.

“It’s a quality versus quantity” philosophy “that is appropriate for the kind of destination that we are.”

“Given the quality of service and the investments that our lodging community has made,” creating a high level visitor experience, “it makes more sense to focus on having an appropriate (average daily room rates) versus trying to drive occupancy,” said Gregory.

Such growth is “extremely healthy,” Shipman said. “It’s a testament to the owners and operators of the lodging community and their commitment to quality and providing an exceptional product and service.”

In this regard, there are few other areas like Napa Valley, said Gregory. Aspen, Colorado could be one comparable.

“Aspen and the Napa Valley have similar approaches to rate vs. occupancy management,” said Gregory. “Aspen also has a relatively similar rates overall, though, of course, their peak season is the opposite of ours.

A recent example is that lodging in Aspen was at 81.3 percent occupancy in January of this year and the average daily rate was nearly $600.

“Lodging managers could have certainly lowered rates and achieved a higher level of occupancy if that was their priority, which it obviously is not,” he said.

Another piece of data from Visit Napa Valley provided insight on where lodging employees live.

According to a newly released survey with data from 2015, 77.4 percent of lodging industry employees live in Napa County. That may surprise some people, said Gregory.

However, “It’s a good surprise in that it means that not as many people are driving in and out of the valley as was thought.”

The data also included information on Napa County average lodging wages.

Administrative workers in the lodging industry make an average of $17.69 per hour, housekeeping $15.45, grounds and maintenance $15.20 and front of house $14.83. The California minimum wage is $10.50.

Providing the quality service that Napa Valley visitors expect means hiring quality employees who therefore demand higher wages, said Gregory.

“I don’t see wages going down, for sure,” he said.

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And the cost of living in Napa is not inexpensive. "I think that is a driver of higher wages as well,” said Shipman.

Gregory said Visit Napa Valley is forecasting a 4.5 percent growth in lodging revenue for the 2017-2018 fiscal year.

“Some people would say that’s conservative and it’s true, especially with Los Alcobas (in St. Helena) and the Archer opening,” but there has also been concern about some reduction in international travel into the U.S. based on policies put in place by the current administration in Washington, D.C., said Gregory.

Over the past few years, the Visit Napa Valley welcome center on Main Street has seen a slight drop in the number of visitors. For the most current fiscal year, which ended June 30, a total of 133,168 visitors came to the center. The previous fiscal year the number totaled 139,367 and before that 142,297.

Gregory said there are two related reasons why.

VisitNapaValley.com is now a "responsive" site, meaning that it adapts itself to most hardware, including desktop computers, laptops, tablets and smartphones, said Gregory.

“This allows travelers to use the website both for planning their trip to the Valley,” he said.

According to the agency, VisitNapaValley.com is the number one tool used by people planning their trip to the Valley, and the website traffic continues to increase.

“Some of our guests are now bypassing the Welcome Center and setting up their itinerary before they come or on the fly while they are here,” said Gregory.

The age of valley visitors continues to drop - in 2012, the average age was 46.05 years and in 2016 it was 42.7 years, said Gregory.

“Again, this leads to more guests using their mobile devices to plan their trip and book experiences themselves rather than use the Welcome Center.”

Even with the decline, “we do not reduce the number of volunteers, but we do reduce their hours in the winter (and we have done this for the last two years),” said Gregory. “Otherwise, our approach to operations is not changing.”

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Jennifer Huffman is the business editor and a general assignment reporter for the Napa Valley Register. I cover a wide variety of topics for the newspaper. I've been with the Register since 2005.