
Once again Pittsburgh seems to be dodging an unsettling national trend.
Halfway into the year, hotel occupancy dropped nationally by 2.6 percent -- but in Pittsburgh, demand is rising.
Of the 100 largest cities in the country, only 11 saw their hotel occupancy rates rise, according to Smith Travel Research, which tracks hotel occupancy nationwide. Pittsburgh had the ninth highest increase in occupancy rates at 1.3 percent.
"That's pretty good," said Bobby Bowers, senior vice president of operations at Smith Travel Research.
The local numbers look even better when you factor in that there also was an increase in the number of hotel rooms available. A Hampton Inn and Suites opened in the Strip District last year.
Even those hotels that have been around for a while are capitalizing on the occupancy boom.
The University Center Holiday Inn was one of 20 in the chain to be chosen for renovations. In Oakland, the owners spent more than $6 million to redo bathrooms in the rooms, change the wallpaper, renovate the restaurant and redesign the front desk. Sporting the new Holiday Inn logo, the hotel is testing other features, such as new bedding in which the bed spreads are a thing of the past and the blankets, comforter and sheets all get washed daily.
Last week, John Severino, the general manager of the University Center Holiday Inn, was going through the reports from Smith Travel Research with the other managers at the hotel. "For every manager, that's your bible," he said.
Mr. Severino said the hotel's occupancy rates have been strong. On Monday night, there wasn't an empty room.
"Where we're located, it's pretty recession-proof," he said. It's the closest hotel to Carnegie Mellon University and surrounded by the University of Pittsburgh. During the week, the rooms are filled with people doing business with the universities. On the weekends, the proximity to Heinz Memorial Chapel is a draw. Last weekend there were bookings for 10 weddings and one family reunion.
Mr. Severino said during the last serious recession, occupancy fell only 2 percent, even when the hotel also raised its rates.
Across the country, 19 of the top 25 markets, which are all larger cities than Pittsburgh, saw declines in their hotel occupancies in the first six months of this year compared with the same period last year.
In the 11 benchmark cities that VisitPittsburgh uses to compare Pittsburgh's performance, Pittsburgh came out on top. Of those cities -- which do include some of the larger markets such as Philadelphia and Detroit and modestly sized cities such as Charlotte, N.C.; Columbus, Ohio; and Memphis, Tenn. -- Pittsburgh had the highest percentage of growth. Only two benchmark cities, Milwaukee and Louisville, Ky., did not experience declines, Mr. Bowers said. Louisville saw moderate growth; Milwaukee was flat.
The struggling economy has affected hotels in most areas. Of the top 100 markets in the United States, 76 saw occupancy rates drop, 13 markets were flat and only 11 saw increases.
Mr. Bowers said the top 11 included New Orleans, which he called a special case because its 12.1 percent growth in occupancy reflects the recovery from Hurricane Katrina in 2005.
Pittsburgh, which had been below the national average in hotel occupancy, is now dead level with the average at 61.4 percent occupancy.
Joe McGrath, president of VisitPittsburgh, said that was exactly where the city wants to be. Pittsburgh had a 1.6 percent growth in the number of rooms with recent hotel openings and expansions, he said, so room demand actually increased by 2.8 percent year to date from 2007.
In the Greater Pittsburgh area there are 192 hotels with a collective total of 22,072 rooms. The figure, Mr. McGrath said, does not include the smallest boutique hotels or bed and breakfasts.
Full-service hotels need an occupancy rate of 60 percent or just higher to make a profit. However, if the rate starts to climb above 70 percent, hotel chains expand in a market, driving up the surplus of rooms and driving down the rates.
For the Holiday Inn, the Pittsburgh area has been its best market in the state.
John Merkin, senior vice president of Holiday Inn, said one reason midsize cities such as Pittsburgh may be seeing growth in hotel occupancy is that companies are cutting back on large gatherings in places such as New York and Washington, D.C. Instead, companies are holding regional meetings to which their workers can drive.
"That circle has expanded to about a five-hour drive from a three-hour drive," he said.
Pittsburgh is well-positioned for those sorts of regional meetings.
VisitPittsburgh officials also point to a study conducted by a state House tourism committee and the Department of Community and Economic Development that ranked Allegheny County first in the state for tourism based on spending.
The success of local hotels is attracting some high-profile competition.
Harmar-based Kratsa Properties, which is currently building a 115-room SpringHill Suites on the South Side, has signed on to build a six-story Hilton Garden Inn, Downtown, and a 180-room Marriott Residence Inn on the North Shore.
A 178-room Hyatt Place Hotel is in the works for the North Shore near PNC Park.
DOC-Economou, which is planning a $48 million hotel-condo-retail project on the South Side, also plans to build a 120-room hotel as part of a redevelopment of the former Don Allen Auto City site in Shadyside.
And Three PNC Plaza, which is undergoing construction Downtown, will house a 165-room hotel to be run by Toronto-based Fairmont Hotels and Resorts.
Whether Pittsburgh's occupancy rate will remain at the national average once those rooms are added to the mix is anyone's guess, but for now there is plenty of room in the inn-keeping business.