Editor’s Note: This is the sixth in a 15-part series (appearing on Lodgingmagazine.com each Monday) examining the performance of various markets in the United States. The following is courtesy of Deloitte’s “Hospitality Vision US Performance Review.”
The past year has been a middling one for the Phoenix hospitality industry. STR metrics show that through November, occupancy in the Phoenix market was only 5 percent higher than the same period in 2010, while revPAR was up by 8.4 percent. Yet, industry watchers predict that macro-level demand drivers, including population growth and a burgeoning economy, could set the stage for sustained growth in the years to come.
Overall, tourism was up in 2011, with more leisure and business travelers visiting the state. Higher occupancy and room rates were enabled by a decline in the number of new rooms added in the market (an advantage that could disappear as new properties come on line). Smith Travel Research says that the fans of spring training stimulated Phoenix's tourism industry in March.
On another positive note, the Clarendon Hotel reported first-quarter revenue increases of 38.7 percent compared to 2010; the Candlewood Suites Phoenix experienced a similar uptick. The 242-room Westin Phoenix Downtown opened during March, one of many new properties, most still under development. In November, Marriott International announced its intention to move forward with a 280-room urban concept hotel at Central Avenue and Madison Street, part of the redevelopment efforts at the Luhrs Tower. Construction could start in early 2012 (bizjournals.com).
As reported by The Arizona Republic, the developer of downtown Phoenix's CityScape project secured a $34.3 million loan from the nonprofit Phoenix Community Development and Investment Corporation (a participant in a US Department of Treasury community development program) to help cover construction costs for the Palomar Hotel. The project also received a $12 million loan from a Hispanic community development agency that focuses its efforts on assisting low-income and minority residents and businesses, which cited the hotel as a source of jobs for a Latino workforce.
Yet, hotel and tourism officials fear that Arizona's controversial immigration law will cause Phoenix to lose the business of conventions and conferences, which are often booked two or more years ahead of time, noting that reservations lagged in 2011.
On a positive note, the Arizona Department of Commerce predicts that the hospitality and leisure sector would add a total of 17,400 jobs in 2011 and 2012.