Record Number of Hotels Took In More Than $3M in 2013

For the ninth straight year, the Embassy Suites Northwest Arkansas in Rogers was the top hotel in the area in terms of room revenue.

The John Q. Hammons Inc. development overlooking Interstate 49 — smack in the middle of what some have dubbed the future “Downtown Northwest Arkansas” — took in $12.32 million in 2013.

For the foreseeable future, the hotel will be the benchmark among area hotels in terms of revenue. Its available rooms double the amount of what nearly every other lodging option can offer.

The property, which opened in May 2003, expanded to its current inventory of 400 rooms in July 2007 with the opening of the 152-room spa tower, built to accommodate the adjacent John Q. Hammons Convention Center.

Only The Chancellor Hotel in Fayetteville (207) and the Holiday Inn Northwest Arkansas in Springdale (206) also have more than 200 rooms.

But a rising tide not only floats all boats, it also floats hotels, and a growing number of properties in the area are reaping greater economic benefits from being in Northwest Arkansas, well-documented for its growing population, robust economy and constant stream of business travelers.

In fact, for the first time since the Northwest Arkansas Business Journal began compiling a ranking of area hotels (see list on page 10), eight properties recorded annual room revenues of at least $3 million.

Only two years ago, just three hotels in the two-county area reported more than $3 million in annual revenue.

Rounding out the top five in 2013 were the Holiday Inn Northwest Arkansas in Springdale ($4.21 million), DoubleTree Suites by Hilton in Bentonville ($4.21 million), The Chancellor Hotel in Fayetteville ($3.54 million) and 21c Museum Hotel in Bentonville ($3.25 million), which opened its doors in February 2013.

Courtyard by Marriott in Fayetteville, Aloft in Rogers and Hilton Garden Inn in Bentonville also topped the $3 million mark.

Hotels had to make at least $500,000 in room revenue to be included in the list. Totals are based on sales tax figures provided by each city.

Collectively, the 52 hotels ranked in this year’s list combined for $97.36 million in room revenue, an increase of 7.7 percent from 2012.

For an apples-to-apples illustration of hotel growth, consider 2013 a record year for the hotel industry when focused on just the top 30 hotels. Northwest Arkansas’ top 30 properties took in a combined $78.51 million in 2013, up 8.9 percent from 2012.

In 2004, the area’s top 30 hotels in terms of revenue collected $55.09 million in revenue.

 

Comeback Hotel

Perhaps no hotel is as happy to be in the $3 million club as The Chancellor.

Happy to be back in the club, that is.

According to city tax collections, the 15-story hotel at 70 N. East Ave. averaged about $1.5 million in room revenue annually from 2008 to 2012 and endured its share of ups and downs.

It passed into receivership and was acquired in December 2010 by ANB Ventures LLC, a company created by the FDIC to sort through the loans made by Bentonville bank ANB Financial NA.

Federal regulators shut down the lender in May 2008, halting the multimillion-dollar renovation effort of Fayetteville businessmen Richard Alexander and John Nock. They bought the hotel, then known as the Cosmopolitan, in 2006.

The property received new life, though, in 2011 when investors Sam Alley and Ike Thrash, through their Southwind Hospitality Holdings LLC, paid $3.8 million for the property, with designs on a complete and thorough renovation.

On Sept. 14, 2012, after being closed for a 10-month refurbishment project with a price tag of close to $16 million, hundreds of people, including Arkansas Gov. Mike Beebe, crowded into the first-floor lobby to re-open the property as The Chancellor.

The investment in downtown Fayetteville has proven to be a smart one.

“Even with the investment, it takes a while to overcome past history,” said hotel general manager Jay Johnson. “The challenge to overcome is still public perception that this is the Cosmopolitan. But 2013 was a great year for us, and it’s going even better in 2014.

“I spoke with the owners recently and they are very happy; therefore, my life is good.”

Johnson joined the hotel in July 2013. He had previously worked as general manager at Embassy Suites in Birmingham and has hospitality experience at properties across the country including Oregon, Minnesota, Florida and West Virginia.

He has also worked in a college town as general manager of a Marriott in Madison, Wisconsin, in the mid-’90s.

Johnson said business relating to the University of Arkansas remains strong — the UA and the Walton Arts Center are the hotel’s two largest accounts — but penetrating the large corporate market remains a goal.

“We’ve had great success there,” he said, deflecting credit to hotel sales executives Amanda Khanga and Sage Stafford. “That could give us a more even-keeled business throughout the year.”

Johnson said the hotel’s occupancy rate was 51 percent in 2013. He expects it to be closer to 60 percent in 2014.

 

By the Numbers

Hotels in Rogers continue to earn the most revenue per room. Rogers hotels ranked in our list collected an average of $20,520 per room in 2013, based on city hotel tax records.

Rogers’ top 12 hotels have 1,614 rooms, most among Northwest Arkansas’ four largest cities.

Springdale hotels are the second-highest money earners. The 840 rooms among the city’s top nine hotels had average per-room revenue of $17,464.

In Bentonville, its top 14 hotels have a combined 1,410 rooms, and generated an average of $17,092 per room in 2013.

The city’s upscale 21c Museum Hotel, in its first full year of operation, is the top hotel in the market in terms of revenue per room. The 104-room property took in $3.25 million, an average of $31,250 per room.

Fayetteville had the most hotels ranked in our list with 16. The 1,560 rooms among those properties had average revenue per room of $15,416.

The lone hotel ranked in this year’s list from Siloam Springs — the 66-room Hampton Inn — averaged $21,515 in revenue per room in 2013.

In terms of overall occupancy, Northwest Arkansas finished 2013 with a 52.7 percent occupancy rate among its 98 properties and 9,269 rooms. That is according to data from STR, a Tennessee-based hotel consulting and research firm. That’s up from 51.4 percent in 2012.