Hartford Business Journal

12 Hartford Business Journal • December 3, 2018 • www.HartfordBusiness.com By Joe Cooper jcooper@hartfordbusiness.com A fter four months in operation, the overseer of Rocky Hill's Hampton Inn & Suites by Hilton says his ccompany's new 90-room hotel is outperforming sev- eral occupancy projections. Gary Desai, president of Lotus Hospitality Inc., which operates five Connecticut hotels, says his firm's new 58,000-square-foot lodging facility at 685 Cromwell Ave., is benefiting from Rocky Hill's growing downtown, which has an abundance of office, cor- porate and distribution space. But much of the early success, he says, is being driven by unmet demand in Greater Hartford's lodging sector, where Lotus identified a lack of quality hotels in the upper-middle market south of Hartford, he said. Hampton Inn's experience mir- rors what's been a relatively healthy Greater Hartford hotel sector in re- cent years. In fact, since the depths of the Great Recession, Hartford region hotels have steadily recovered, annu- ally booking higher occupancy rates and more revenue per available room. Competitive room rates, a slow, but consistent economic recovery and a concentration of tourist attractions statewide have helped boost the region's hospitality sector, industry experts say. Still, challenges remain, especially in downtown Hartford, where major entertainment venues, like XL Cen- ter and the Connecticut Convention Center — which hotels rely on to attract visitors — face an increasingly competitive landscape and have lost shows to nearby venues, although the short-term outlook is trending upward, officials said. Since 2012, Hartford region hotels' average occupancy rates have in- creased 11 percent, while average daily room rates and revenue per available room have climbed 18 percent and 30 percent, respectively, according to market data firm Smith Travel Re- search (STR). Hotels through August this year are booking about 63 percent of their rooms every night, while the average daily room rate and revenue per available room have grown to $115.97 and $72.59, respectively. By comparison, the average U.S. hotel occupancy rate was 66.7 percent at the end of September, according to CoStar Portfolio Strategy. Meantime, revenues from Greater Hartford's 135 hotels jumped 23.1 percent from $265.4 million in 2012 to almost $327 million in 2017, STR data shows. Lotus, Desai says, has fully recov- ered from the Great Recession as healthier state and national economies have helped increase leisure travel. He believes there are enough rooms in downtown and Greater Hartford to meet current demand, and is optimistic the region will continue to experience "moderate" growth in the year ahead. But as far as entertainment goes, Desai views Mohegan Sun's new $80 million convention center as a major threat to Hartford for convention business. That could hurt regional hotel stays as well. "Hartford has made great strides recently and would need to continue to grow and shape itself into a desti- nation city that hosts larger entertain- ment events and conventions regular- ly, in order to support any substantial growth in hotel room supply," he said. Aside from a significant decline in statewide funding for tourism market- ing, the local lodging sector has many assets in its favor, said Ginny Kozlowski, executive director of the Connecticut Lodging Association, which provides advocacy and educational services to some of the state's 400 hotels. Competitive room rates, Kozlowski said, is one of the main reasons for the region's lodging growth. A recent study by BostonHotels.org found Hartford hotels had New England's lowest average room rate in August at $109 per night. Hotel operators are able to offer lower rates because Connecticut facilities often house less meeting and banquet space, she said, which reduces overhead costs. Meantime, the state and Greater Hartford have a concentration of tour- ist attractions: Highly regarded golf courses; a growing brewery industry; numerous historical and cultural at- tractions; and other activities along the Connecticut River. "We have these historical assets that people across the country do not have," Kozlowski said. Key to economy A healthy lodging sector in Connecti- cut is crucial for the state's economy and budget. There are about 400 hotel prop- erties in Connecticut that generate bil- lions of dollars in annual guest spending. The state generated almost $130 mil- lion from its 8.65 percent hotel room oc- cupancy tax in fiscal year 2017-18, which was 11.5 percent higher than it recorded in 2014-15, according to the Connecticut Department of Revenue Services. And hospitality jobs have also rebounded since 2010, according to the state Department of Labor. The in- dustry employs around 11,900 people today, up from 10,900 people eight years ago. The future jobs outlook is also promising. The Labor Department expects the industry to reach a more Lodging Growth Greater Hartford's hospitality industry continues slow, but steady comeback "Hartford has made great strides recently and would need to continue to grow and shape itself into a destination city that hosts larger entertainment events and conventions regularly, in order to support any substantial growth in hotel room supply." Gary Desai , president of Lotus Hospitality Inc. Rocky Hill's Hampton Inn & Suites debuted earlier this year and has enjoyed higher-than- expected occupancy rates so far, mirroring a relatively healthy Greater Hartford lodging market. The lobby of Rocky Hill's $7 million Hampton Inn & Suites features a modern look and refreshment area. PHOTOS | CONTRIBUTED

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