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Boston-Area Hotels Gaining Traction As Room Rates Rise

By Lisa van der Pool, Boston Business Journal
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A room in the Liberty Hotel in Boston. (File Image credit: HO/LIBERTY HOTEL/AFP/Getty Images)

A room in the Liberty Hotel in Boston. (File Image credit: HO/LIBERTY HOTEL/AFP/Getty Images)

BOSTON (CBS) – With demand for hotel rooms back to pre-recession levels, rates are increasing locally — but hotel operators say they’re still cautious in their optimism.

The summer tourism season is in full-swing and numbers for local hotels have been strong this year. But reservations continue to be last minute, making business much less predictable. The bright side for consumers: hotels often are offering deals, and free parking is almost always a given.

Despite having to make inducements, operators are happy at least that room rates are finally growing. Downtown Boston hotels in May saw a 3.3 percent uptick in average daily room rates to $215.74 compared to May 2010. Occupancy in May hit 86.3, which was essentially flat compared to May 2010.

Lisa van der Pool of the Boston Business Journal reports:

RevPar — or revenue per available room, a key indicator for hotels — increased by 2.8 percent in May for downtown hotels, according to the most recent data from PKF Consulting USA, which tracks the hospitality industry.

For the first five months of the year, the average daily room rate is up 3 percent to $183.88 and RevPar is up 4 percent to $134.04 for downtown Boston hotels, according to PKF.

During the recession, hotel room rates were slashed, as hotels desperately tried to attract “heads in beds,” but once those rates drop, it’s always a slow climb back up.

The Boston market surpassed its “long-run average” occupancy of 67.3 percent between 1988 and 2010, when the market achieved a 68.7 occupancy last year.

PKF forecasts that rates will finally return to pre-recession levels next year, in 2012, when the average daily room rate in the Greater Boston market is expected to reach $159.55. The average daily rate’s last high was $154.68 — back in 2008.

Paul Tormey, regional vice president and general manager of the Fairmont Copley Plaza, says rates at his Back Bay hotel are up about 15 percent over last year. Current rates on the Fairmont’s website range from $262, part of a 15 percent off summer sale, to around $364 per night.

“We’re cautiously optimistic,” said Tormey. “Rates are not as high as they ought to be.”

Tormey says business has been good this summer. Part of his hotel’s strategy to attract travelers has been to be “chock full of options,” in terms of deals.

“We’re trying to be as flexible as possible,” said Tormey.

In Cambridge, the hotel business has also enjoyed growth, with RevPar up 4.1 percent to $134.04 and occupancy hovering around 70 percent for the first five months of year, according to PKF.

“It’s definitely improved, but we’re picking up a substantial number of rooms every day, for the next few days,” said Alex Attia, general manager of the Charles Hotel in Cambridge. “Consumers are feeling like rooms are available, restaurant seats are available and that there are deals out there.”

For the Charles, which employs more than 400 people and has an occupancy rate in the high 70s currently, the ideal rate is close to $300. But current rates can start at $239 and go up to over $400 for suites, according to the hotel’s website. Rates have risen about 5 to 7 percent over last year. Hotel packages include some with gas cards and free parking. The Charles has 294 rooms.

Attia says that while business is good, “confidence” about the market hasn’t returned to what it was before the recession.

Occupancy is in the high 80s at the 31-room, one-year-old Hotel Veritas in Cambridge. General Manager Benson Willis says guests are taking advantage of the hotel’s 30 percent off offer in July and August, as well as its free-parking offer. The average rate at the hotel right now is around $270.

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