For Boston hotels, a welcome return

Helped by lower rates, January business bounces back

March 12, 2010|Katie Johnston Chase, Globe Staff

On the heels of a difficult year, Boston-area hotels experienced double-digit growth in January, with occupancy back to 2008 levels.

Hotels in Back Bay, downtown, Cambridge, and between Interstates 95 and 495 north of Boston fared particularly well in the first month of the year compared with January 2009, according to the local branch of the hospitality research firm PKF Consulting.

Overall, revenue per available room, which factors in rates and occupancy, was up 15 percent in the Boston area from a year ago, to $70.67. Occupancy for the month was 52 percent, up from 44 percent in January 2009 and equal to the level of January 2008, when there were fewer hotels in the market.

The results follow more than a year of declines as Americans cut back back on business and leisure travel during the recession.

In 2009, hotel revenues dipped nearly 17 percent — nationwide as well as among Boston-area hotels.

“We haven’t seen consistently good numbers since prior to October of ’08,’’ said Reed Woodworth of PKF Consulting. “These are just good, healthy signs that the lodging industry is turning around.’’

January is typically the slowest month of the year in the hotel industry, which means that just a few extra groups booking rooms can have a big impact on the numbers. And the year-ago January, when revenue per available room was down 21 percent from January 2008, was particularly bad.

Part of the reason for the increased occupancy may be lower prices. The average daily room rate in the Boston area was $135 in January, down from $140 in January 2009 and $153 in January 2008, according to PKF Consulting.

But the discounts won’t last long. After eight quarters of declines, PKF forecasts that room rates will start increasing in the fourth quarter.

In other words, if you want a good rate on a hotel room, don’t wait.

“Prices are not going to get much cheaper than they are right now,’’ Woodworth said.

At the Eliot Hotel in Back Bay, average room rates were down about 10 percent in January compared the same month in 2009. But occupancy increased by about 9 percent over last year, with almost 43 percent of its 95 rooms filled.

This is a typical occupancy rate for January, said general manager Pascale Schlaefli, but not one she thought the hotel would get to this year. “For unforeseen reasons, we got a lot of last-minute pickup,’’ she said.

The January numbers don’t mean that Boston area hotels are out of the woods. February numbers aren’t out yet, but Paul Sacco, president of the Massachusetts Lodging Association, said he has heard they aren’t as encouraging.

“January was a pleasant surprise for most of the hoteliers that I spoke with,’’ Sacco said.

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