Hotels slowly rebound from pandemic lows
Industry reports point to return to pre-COVID levels in 2026, but some indicators point to faster pace as activity returns.
Laurel Schacht sees hospitality needs growing as the COVID-19 pandemic begins to subside in Rochester.
Whereas hotel guests had bunkered down in rooms between medical appointments in recent months, they are now looking to get out.
“People are definitely asking about things to do again,” said the general manager of Rochester’s Aspen Select and Aspen Suites hotels. “They want to go out and explore.”
- Eagle Store: 'We need people to come back and work downtown'
And the number of hotel guests is gradually rebounding.
Rochester’s hotels saw a combined 44.4 percent occupancy rate in May, the last month with available data. That’s up nearly 60 percent from a year earlier, but not close to the 60 percent to 70 percent rates before COVID-19 arrived.
Hotels saw their lowest occupancy monthly rate -- 15.9 percent -- in April 2020, following the March 13 statewide pandemic emergency declaration.
Joe Ward, president of Experience Rochester, the city’s convention and visitors bureau, said reliance on occupancy rates to measure hotel activity doesn’t provide a complete picture in Rochester, since the number of hotels has grown in the past year.
The city has 189,999 hotel rooms, up from 174,747 a year earlier and more are under construction.
Ward said average daily rates and overall revenue per available room are also important figures to watch.
Room rates in Rochester dipped from an average of $119.21 at the start of 2020 to a low average of $82.19 in April, but a look at year-to-year comparisons show a less drastic impact.
The average rate for the first five months of 2019 was $118, which dropped to just shy of $111 for the same period in 2020. The five-month average dropped further to $106.53 for this year.
“The rate held stronger than some of us thought it would going into (the pandemic),” Ward said, noting that a 20 percent to 25 percent dip was predicted as stay-at-home orders were being issued.
Instead, the drop was 6.3 percent.
Andy Thilges, who leads monthly hospitality discussions for the Rochester Area Chamber of Commerce, said the revenue per available room is as important as occupancy rates and room rates, since it accounts for both individual figures.
“Those three components are the report card for any hotel,” said the director of sales and marketing for Home2 Suites by Hilton.
Ward said the citywide revenue per available room going into the pandemic -- $75 -- was considered “tremendous” compared to industry standards. He said it’s a piece of data that helped spur hotel development in recent years.
The figure dipped to $42 for the first part of 2020, but appears to be slowly recovering with an average of $43.50 for the first five months of this year.
“I think our city is definitely in a recovery mode as we are seeing strong occupancy and favorable rate growth,” Thilges said, pointing to increased patient activity at Mayo Clinic.
He said events returning to Mayo Civic Center and other parts of the city will be key to added activity.
For example, the U.S. Trampoline and Tumbling Association’s National Championships held last month reportedly helped fill 75 percent of the hotel rooms in the city as more than 1,700 competitors came to Rochester.
Schacht said the impact was felt throughout the city’s hotels, including those she oversees. While they saw none of the event participants, they dealt with overflow from other parts of the city.
“I had none of that business, but I was able to fill the hotels,” she said.
Ward said he anticipates a similar result from a fall women’s conference that is being scheduled locally after its initial venue became unavailable in another part of the state.
“That will take any available hotel room that will be available,” he said.
Since most convention and meeting activity is scheduled two to three years in advance, Ward said the Civic Center staff has been working to reschedule as many canceled events as possible, but some aren’t expected to return until 2022.
Most notably, the Jehovah's Witnesses’ conventions, which bring close to 20,000 people and deliver $20 million to the city, won’t be back this year after canceling in 2020.
Ward said the national organization, which holds 800 conventions a year throughout the U.S., has announced it will return to holding events after June 30, 2022.
Since the Rochester conventions are held in July and August, he said he expects the crowds will return next year.
Schacht said the return will help fill rooms and meet previously established goals.
“That’s what is holding us back from being pre-COVID capacity,” she said of the conventions.
Another factor will be international travel, which Ward and Thilges said drive added activity in downtown hotels, as patients fly in to be seen at Mayo Clinic.
Ward said he expects it will all combine in the next few years to help the city’s hotels return to pre-pandemic numbers earlier than predicted in industry reports, which show a return to past occupancy and room rates in 2026.
“It’s an educated, conservative projection,” he said of the projection.