Article on Tulsa Hotel Industry

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The Journal Record (Oklahoma City, OK)
January 11, 2006 Wednesday
NEWS
745 words
Tulsa hotel industry builds toward prosperity
Kirby Lee Davis

After three years of famine, Tulsa area hotel operators anticipate a feast.

The 13,000-room market finished 2005 with 57-percent occupancy, according to Suzan Stewart, senior vice president at the Tulsa Convention and Visitors Bureau. While that falls far below the preferred 70-percent level, Stewart said it represented strong growth from 52-percent occupancy in 2004.

"It's healthy given the fact that we were down in the 40s for a very long time," she said. "The hotels are making money now."

Pete Patel, vice president of operations for Frontier Hotels Management Group in Tulsa and a past president of the Tulsa Hotel and Lodging Association, projected the occupancy rate could hit 60 percent this year, which would match the national average.

"Once we start getting near the national average," he said, "you'll start seeing more interest in Tulsa."

Stewart said many operators have reported expanded length of stays, both with families and business travel. Room rates have risen 5 percent overall - and in some categories, 10 to 12 percent.

"It's been good," said Rachel Anderson, manager of the Best Western Aquarium Inn and Suites at Jenks. "One of our main obstacles is just getting people to know that we're out here. But being between the aquarium and the RiverWalk Crossing is good."

Tulsa's hotel/motel tax collections have risen about 12 percent this year, following a 4-percent increase in 2004. Stewart projected a record $5 million-plus for the city's fiscal year, which ends June 30.

"We in the hotel industry are very optimistic," she said.

All this comes as the sector added about 700 rooms in 2005 - including the Best Western, which opened its doors in May beside the Oklahoma Aquarium, and the Hilton Garden Inn Tulsa South, which served its first guests in November. Stewart anticipates another 500 to 600 this year, including a Holiday Inn Express and Hotel Suites rising on the hill north of the Bass Pro Shops in Broken Arrow.

"Once you start seeing a turnaround like that, you start seeing some resurgence in development," said Patel, whose firm operates five hotels and anticipates more. "I think what will happen in 2006 will be some resurgence of new construction. There's pockets in town that will probably get two or three new hotels."

Other projects under construction include a Hampton Inn Garden Suites for phase two of the RiverWalk Crossing development in Jenks, a second hotel at Broken Arrow's Stonewood development and a hotel in connection to a Bixby convention center.

While it raises fears of diluting the existing marketplace, Stewart said that reflects normal attrition.

"All that construction's fairly normal for a healthy market," she said. "For one that's on the rebound, it's a little accelerated."

Many of the projects represent smaller, limited service hotels that are easier to finance, Stewart said.

To keep pace, several area hotels - including downtown's Crowne Plaza, Doubletree and Great Western - launched renovations in 2005.

"We have probably $25 million in renovations completed in 2005 and you've got about $15 million more in '06," Stewart said.

Tulsa's troubles earlier this decade reflected more than just the aftermath of 2001's terrorist attacks. Stewart pointed to several high-profile job losses, from CFS to MCI to Citgo and WilTel, as well as the blows suffered by the airline industry, which is Tulsa's largest employer.

"Not only do you lose the jobs, but you lose the people who were calling on those jobs," she said of vendors and suppliers. "Corporate travel went away."

Adding onto that were such factors as the national recession, a trend toward smaller hotels serving cost-conscious travelers, and aging Tulsa facilities, not just in hotels but also convention centers.

But Tulsa continues to enjoy lower travel costs than much of the nation, she said, and as people became more comfortable with safety concerns, they began to take advantage of those low costs.

"People are feeling confident enough about the economy and the travel situation that they're willing to travel again," she said.

Stewart pinned the improving outlook on rising discretionary income and consumer confidence.

"Corporate travel is coming back in a very major way for Tulsa," she said. "It's much healthier than it has been."

Patel anticipates steady upward growth for the Tulsa market, "but it will not be a boom time like 2000 and 2001." He also doubted the market would do as well as Oklahoma City's.

"They have much more to offer," he said.
January 11, 2006