Hotels See 10.6 Percent Revenue Rise in 2012
by July 22, 2013 12:00 am 85 views
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In 2002, there were 36 hotels in Benton and Washington counties with estimated gross annual revenues of at least $500,000, and only 24 that generated $1 million or more.
The collective revenue of those 36 properties was $53.85 million.
Fast-forward a decade, and the growth in the two-county area is easily mirrored by the increase in the number of moneymaking hotel developments.
According to the Northwest Arkansas Business Journal’s annual list of Largest Hotels (see list page 12), 53 hotels had at least $500,000 in room revenue in 2012 — a 47 percent increase in the last 10 years.
For the eighth consecutive year, the Embassy Suites Northwest Arkansas in the Pinnacle Hills area of Rogers was the top hotel in terms of revenue.
With more rooms (400) than the next two largest hotels in the area combined, the John Q. Hammons Hotels Inc. property collected $12.11 million in revenue in 2012.
The hotel, which opened in May 2003, expanded to 400 rooms in July 2007 with the addition of a 152-room spa tower, built to accommodate the adjacent John Q. Hammons Center.
Embassy Suites’ total from 2012 represents its most successful year. Its previous high-water revenue mark was $12.05 million in 2008.
Rounding out the top five last year were the Holiday Inn Northwest Arkansas in Springdale ($3.84 million), DoubleTree Suites by Hilton in Bentonville ($3.82 million), Courtyard by Marriott in Fayetteville ($3.19 million) and Aloft Hotel in Rogers ($3.15 million).
It marks the first time in five years that five hotels in Northwest Arkansas eclipsed the $3 million mark in one year.
Only hotels with at least $500,000 in revenue are included in the list. Totals are based on sales tax figures provided by each city.
Continued Recovery
Total revenue from the 53 largest hotels jumped collectively about 10 percent from 2011 to 2012, up to $91.74 million, with 37 hotels topping the $1 million mark last year.
That beat the national average of a 6.8 percent increase in revenue last year, according to Smith Travel Research.
The increase can be attributed to a continued recovery in travel demand, and virtually no new supply. Of the hotels ranked in our list, Homewood Suites by Hilton in Fayetteville and TownePlace Suites by Marriott in Springdale are the newest, both opening in 2009.
21c Museum Hotel in downtown Bentonville, which opened in February, is included in our list but not ranked because it was not open last year.
Of those properties ranked in our list, 17 are in Fayetteville, 12 each in both Bentonville and Rogers, 11 in Springdale and one in Siloam Springs.
Of Northwest Arkansas’ four largest cities, ranked hotels in Rogers generated a combined $32.70 million in 2012, an 11.9 percent increase from 2011.
Fayetteville hotels generated $22.66 million in 2012 (9.5 percent increase); Bentonville hotels brought in $19.49 million (17.3 percent increase); and Springdale hotels had $15.49 million in revenue (12.6 percent increase).
The Inn at the Mill in Johnson declined to provide its revenue figures, so it is included in the list but not ranked.
The Inn at Carnall Hall, on the northeast corner of the University of Arkansas campus at Arkansas Avenue and Maple Street, had total revenue in 2012 of $2.06 million, down about $200,000 from 2011, according to records.
That total, however, reflects a combination of both room revenue and food and beverage revenue, so it is included in the list but not ranked.
The property includes a formal restaurant, Ella’s.
Everybody’s Up
In total, 33 of the 53 hotels ranked in this year’s list realized a revenue increase of at least 10 percent in 2012.
Of the top 10 hotels, eight properties enjoyed double-digit increases in room revenue.
The largest of those was at the DoubleTree Suites by Hilton in Bentonville, which enjoyed its best year since opening in 2008.
Revenue at the property jumped nearly 22 percent, up to $3.82 in 2012.
“For us, we’re always trying to think outside the box for new ways to cater to new clients,” said Abby Hobbs, the hotel’s director of sales and marketing. Hobbs was part of a turnover of the property’s entire sales staff between the third and fourth quarters last year. She helped open the hotel as director of catering, left for a couple of years and returned in September as sales director.
“I think some new ambition and new hunger has impacted our business,” she said.
Hobbs said competition for business among Bentonville hotels is still fierce. All of them, she said, hope to partner with Crystal Bridges Museum of American Art in some form or fashion.
Capitalizing on the city’s reputation as a mecca for youth sports events in the summer is also spirited.
“A lot of the families here are traveling on a budget, and there are less expensive hotels in the area,” she said. “We’re still competing for smaller hotels for the same business. It’s still difficult.”
Simmons Suites in Bentonville increased its room revenue by 42.2 percent in 2012. The four-story hotel sits near the exit at the junction of Interstate 540 and Highway 72, a primary entryway to Crystal Bridges.
Unlike other areas in Benton and Washington counties that have clusters of hotels, Simmons Suites has the benefit of being the only lodging option at its particular exit.
Only four of the 53 hotels ranked in this year’s list showed a year-over-year revenue decline in 2012 — MainStay Suites in Rogers (-3.0 percent) and the Chancellor Hotel (-34.4 percent), Quality Inn (-25.9 percent) and GuestHouse International (-15.2 percent), all in Fayetteville.
The GuestHouse and Chancellor numbers are easily explained. GuestHouse International, the former Clarion Inn in Fayetteville, was sold in the fourth quarter of 2012 and generated just $2,714 in revenue in the last two months of Fayetteville’s fiscal year — October and November — while the new owners initiated extensive renovations to the property.
The Chancellor Hotel, formerly The Cosmopolitan, was open for just three months of the fiscal year, and still generated $802,344 in revenue. It opened under new ownership in September, following a $16 million renovation project that closed the property for 10 months.
Revenue By Room
According to records, hotels in Rogers earned the most revenue per room. Rogers hotels ranked in our list collected an average of $20,260 per room in 2012, based on city hotel tax records.
Rogers’ top 12 hotels have 1,614 rooms.
Bentonville hotel rooms are the second-highest money earners. The 1,188 rooms among the top 12 hotels in the city had average revenue of $16,405.
The city’s new 21c Museum Hotel, made $3,275 on average for each of its 104 rooms in April alone.
Multiplied over 12 months, that would be $39,305 in revenue per room for an entire year, which would easily rank as the top revenue-per-room hotel in the market.
Rogers and Bentonville would still rank 1-2 in revenue per room if Embassy Suites weren’t part of the equation. Without its inventory of 400 rooms, the dollar amounts in 2012 would have come out to $16,960 per room for Rogers’ top 11 hotels.
Fayetteville had the most rooms among its top hotels — 1,757 rooms among its 17 top revenue generators. Those hotels made an average of $12,896 per room.
In Springdale, its top 11 hotels have a combined 1,052 rooms, and generated an average of $14,724 per room in 2012.
The single hotel property ranked in this year’s list from Siloam Springs — the 66-room Hampton Inn — averaged $21,212 in revenue per room in 2012.