Good Times, Higher Occupancy Rates for Metro Detroit Hotels

By Veronica Grecu, Associate Editor With an occupancy rate of 55.8 percent, Metro Detroit hotels had a very busy April, according to a report by STR, a Tennessee-based information company that specializes in hotel research. The average occupancy rate of 54.5 [...]

With an occupancy rate of 55.8 percent, Metro Detroit hotels had a very busy April, according to a report by STR, a Tennessee-based information company that specializes in hotel research. The average occupancy rate of 54.5 percent for the region shows that there have been signs of improvement throughout the entire first quarter of the year.

Tourism experts expect even larger figures during the summer. In an interview for The Detroit News, Bill Aprill, director of sales at the DoubleTree Suites by Hilton Detroit Downtown, said that the occupancy rate for a Saturday night might go as high as 90 percent in the next months. The STR report also shows that the average daily rate charged for the first quarter 2011 is $76.29, the lowest in six years. The Metro Detroit hotels will most likely keep their fairly inexpensive room prices.

According to Ron Wilson, CEO of Hotel Investment Services, a hotel’s financial stability cannot be measured simply by the number of booked rooms. For example, an occupancy rate of 60 percent means that the hotel is on a survival track, whereas profitability can be measured starting from 70 percent. STR reveals some signs of concern, as well: the average revenue per room in the first quarter 2011 was $41.58, which is less than the average for the same periods in 2007 and 2008.

Also in the headlines this week, the 19-story historic David Whitney building is set to be redeveloped into a new hotel with individual rooms and apartment units. The building was acquired in March for $3.3 million by Whitney Partners LLC, who teamed up with The Roxbury Group, a Detroit-based Developer, and Trans Inns Management Inc., a hotel investment company headquartered in Farmington Hills. The site will be remodeled using lessons learned at hotels that were treated to historic renovations, such as the DoubleTree Fort Shelby and the Westin Book Cadillac. However, according to James Van Dyke, vice president of development at Roxbury, the project can’t start until an estimated $80 million is gathered.