Leisure travel carries the stick for DFW hotel recovery as business travel struggles to get out of blocks

As business travel makes a slow comeback, hoteliers in Dallas-Fort Worth have turned to leisure travel to make up for lost revenue and declining occupancy.

Courtesy of HKS / Sam Moon Group

Rendered by HKS from the Sam Moon Group JW Marriott hotel in the Dallas Arts District.

DFW is one of only two metropolitan areas in the state where third-quarter revenue fell behind the same period in 2019 before the coronavirus pandemic took hold, according to the latest report on the brand hotel management from Source Strategies. Hospitality industry experts say that’s because the Metroplex has historically relied on business travel, which is slowly rebounding after stopping in early 2020.

The Sam Moon Group has hotels throughout the region and is building the very first downtown JW Marriott in the Downtown Arts District. The company’s Renaissance hotel at Legacy West in Plano used to see its heaviest traffic Monday through Thursday, but that has changed since the start of the pandemic.

“Now our weekends are always crowded; we are fully occupied, ”said Daniel Moon, General Counsel and Vice President. “Our weekdays are much better, but we haven’t gone back to what they were before Covid.”

Gorka Amian, director of strategy and data analytics for Kalibri Labs, said upper-tier hotels in urban areas suffered the most due to the lack of business travel. These properties are having the hardest time catching up to pre-Covid levels, he said.

“You don’t see luxury and upscale hotels on the outskirts of town; you see them in urban areas, ”Amian said. “For this reason, business trips and groups, when they stay, they stay in urban areas, they stay in these hotels.”

Data from Kalibri Labs, incorporating the majority of the hotel offering in DFW, shows that overall hotel occupancy in October reached just over 60%, a nose above the national average. During the same month in 2019, DFW occupancy was closer to 70%, according to data from Kalibri.

But where DFW struggles with the rest of the country is in its average daily rate. In October, guest ADR at DFW cost just under $ 120. The national average was closer to $ 140 per day.

These two factors determine a hotel’s revenue per available room, Amian said. According to the Source Strategies report, the Dallas Metro recorded revenue of $ 59.72 per available room in the third quarter, about $ 11 lower than the same period in 2019.

The lack of corporate clients has prompted DFW’s hotel owners to focus on other types of travelers, according to Kevin Donahue, senior vice president of CBRE’s Hotel Advisory Group.

“There’s a lot more pleasure travel, and they’re marketing to customers than they’ve ever had to market,” he said. “They’re just trying to put their heads in the beds.”

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Plano is a business travel hub north of Dallas.

Mark Thompson, executive director of Visit Plano, said his organization has responded to the pandemic by redirecting marketing dollars to travelers within a 300-mile radius of Plano. The analyzes were revealing: In 2020, Visit Plano ads generated 42 million impressions and 400,000 clicks, Thompson said.

“That’s a lot of people who clicked back to see what we had to offer,” he said. “We would like to think that this had an impact on weekend traffic.”

According to CBRE data, the occupancy rate at Plano hotels is almost back to pre-pandemic levels. In the third quarter of this year, 65.42% of rooms were occupied. This is a slight decrease from the occupancy rate of 66.15% recorded in the same quarter in 2019.

Frisco, which is also a business travel hub, looked into events to draw visitors to the city. Visit Frisco chief executive Marla Roe said her team helped move five major sporting events to the region, which generated $ 13 million for the city.

These events included the NCAA National Invitational Tournament as well as the International Ice Hockey Federation’s Under-18 World Championships, said Wesley Lucas, senior communications director for Visit Frisco.

“These have certainly provided an increase in occupancy and some economic impact for our community at a time when there really wasn’t much going on,” she said.

Hotel occupancy rates in Plano and Frisco are higher than those in downtown Dallas, which had a rate of 44.45% in the third quarter, according to CBRE. But that could change in 2022. A full schedule for the Kay Bailey Hutchinson Convention Center in Dallas signals a strong comeback for business travel in the New Year, according to Downtown Dallas Inc.

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Courtesy of Hilton Garden Inn Downtown Dallas

The Hilton Garden Inn Downtown Dallas had to rethink the way it offers its services when leisure travel became its primary business.

Craig Davis, president and CEO of Visit Dallas, said he was optimistic about the recovery of the hotel tourism economy in Dallas in 2022.

“October’s revenue is 90% of the same month’s revenue in 2019, and that’s without the return of business travel in any meaningful way,” he said. “Next year’s groups rival 2019. We expect a full recovery by the end of next year in terms of revenue.”

In the meantime, many downtown hotels have focused on those going on vacation, said Doug Prude, director of business development and opportunities at DDI.

“When companies stopped traveling, hotels really started to entertain residents and people coming from 300 miles or closer for a stay, if you will,” he said. “They were giving offers to a lot of people who live nearby as a method of survival.”

Brooke Beilby, general manager of the downtown Hilton Garden Inn, said the pandemic has completely changed the way her hotel does business. She had to rethink everything, from how to provide services to the leisure traveler to how to recruit staff for short-term bookings.

“If you’re sitting Friday with 50 rooms for sale, you make sure you have absolutely everyone on deck Saturday and Sunday because you’re going to fill them up and you’re going to have a huge start on Sunday,” she said. “So from a service point of view, we had to quickly learn how to react to this. “

Beilby’s Hilton launched a Road Trip Rate program, which encouraged travelers within driving distance to visit the hotel at a time when air travel was still considered risky by some. The tariff offered a 20% discount to customers in all states contiguous to Texas, Beilby said.

“We’ve gone from filling our hotel Monday through Thursday with your normal corporate guests, who fly and take an Uber, to an overwhelming [amount of] guests at the drive-in, ”she said. “This was not only reflected in the success of the road fare, but our valet revenue this year has been absolutely unprecedented, which we didn’t really see coming. “

DFW’s hospitality industry is set to see an improvement in the new year, mainly due to factors such as supply chain disruptions and limited funding affecting the amount of new construction underway, Donahue said.

“We only see a reduction in the new offer that will go live over the next two years, so I think this will be beneficial for hotels that have recently opened and for the existing offer,” he said. he declares.

Many tourism experts agree that DFW hoteliers will once again focus on business travel once they have fully returned. Others see the increase in leisure travel as a permanent change that could be an opportunity to generate booking revenue 365 days a year.

“Our weekends and weekdays are going to be very similar, and that would be the ideal thing because you don’t want to just have a business on the weekday and be dead on the weekends, and vice versa,” he said. Thompson said.

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