Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, September 17, 1995 TAG: 9509150042
SECTION: BUSINESS PAGE: G-1 EDITION: METRO
SOURCE: JEFF STURGEON STAFF WRITER
DATELINE: LENGTH: Long
You couldn't blame Herman Turk for being a little envious. The general manager of the Roanoke Airport Marriott said the beef producers have staged their annual meeting at his hotel seven of the past 11 years. He is out a $30,000 piece of business, at least for this year.
Managers of other upscale hotels report similar experiences, though they said they can hardly blame people for giving the Grand Old Lady a try now that she's been spruced up by a $42 million renovation, including the conference center. Nonetheless, the challenge from Hotel Roanoke comes in what is already a troublesome year for the region's lodging industry.
Open six months as of Oct. 3, Hotel Roanoke has yet to become the hoped-for drawing card for tourists and convention guests who wouldn't otherwise come to the region. Many who know the hotel business would be surprised to see a new facility such as Hotel Roanoke holding its own this soon.
It isn't meeting occupancy projections for the first six months, however, and its business has come partly at the expense of other lodging establishments in the area.
General Manager Gary Walton last week repeated statements made around the time of the opening that the hotel project could take three to five years to become a positive force in the market and to make money. He also has said it is normal for a new or extensively remodeled hotel to struggle until it establishes a reputation and regular clientele.
The hotel's budget makes undisclosed provisions for losses.
The project, a joint venture of Virginia Tech, Roanoke and local residents, is meeting revenue projections, thanks to higher-than-expected food sales. Walton said he is confident it can succeed. He would not discuss specific figures, however.
"Summer is a down period," said Gary Crizer, sales and marketing director. "Us coming into the market didn't help. But I don't think that's indicative of what the future holds."
Crizer and a staff of six market the hotel full time from Roanoke. As a Doubletree Hotel, Hotel Roanoke is on a list of about 100 Doubletrees promoted by that corporation's national sales teams in Los Angeles, Philadelphia and Chicago and by operators in Phoenix who answer Doubletree's toll-free reservation line.
Virginia Tech works to improve the hotel's fortunes by advertising its public service programs and other events scheduled in hotel meeting areas.
Gerald Carter, general manager of the Holiday Inn-Tanglewood, said he supports an expansion of such efforts.
"I have hoped all along this convention center and new hotel would bring in new business that is not recycled business that has been coming here all along," he said. At this point, "I don't see much new business."
\ The hotel's sub-par occupancy rate is of particular concern because it coincides with a prolonged weak period for the area's hotels and motels. A powerful economic force, the 40-odd lodging establishments in this area take in a combined $50 million to $75 million a year, according to Smith Travel Research in Hendersonville, Tenn.
But the local industry has for most of the year reported an unusually high number of vacant rooms - about four in 10 on an average night.
Perhaps more significant is that while demand for rooms is down, the supply is up. During the past 18 months, Hotel Roanoke opened its 332 rooms and other hotels opened another 240.
Make no mistake. Hotel Roanoke remains a source of hope. Area hotel managers said they don't want to sound negative about Hotel Roanoke, which has stood longer than their institutions. They see it an economic engine that simply needs breaking in. They look forward to putting up overflow crowds from big events at the Hotel Roanoke or simply offering those using its conference center a nearby room that costs less.
They point to the hotel's 63,000 square feet of meeting facilities and new pedestrian bridge linking it with the City Market as key selling points.
Right now, though, the largest upscale hotels - generally the largest, offering full-service and charging undiscounted room rates of about $100 a night - want to know: Will my customer who is giving Hotel Roanoke a try come back?
Hotel Roanoke's likeliest competitors are willing to try harder to compete by offering slightly lower prices and incentives.
The average price paid for a room at the Holiday Inn-Tanglewood is down "considerably," Carter said. He declined to be specific.
"You leave the discount [period] open longer until you see the demand coming back, then you cut off the discounts. It's the same thing airlines have been doing for a long time," Carter said. Occupancy levels are running slightly ahead of last year, thanks to the price reductions and hustle of his sales staff, he said. Revenue is also ahead, though "it's not the growth we need."
William Carder, general manager of the Radisson Patrick Henry Hotel in downtown Roanoke, said revenue was flat for the year through July, compared with a year earlier, and "down substantially" in August. This month and next "look tremendous," he said.
In a competitive market, he said, "You have a choice: You can drop prices or do value-added promotions." Carder said he has tried to make a stay at the Patrick Henry a better value, rather than relying primarily on discounted room rates.
Carder hopes to appeal to sightseers and sporting types by selling activity packages. Hotel guests will be able to stop by the registration desk to pick up maps, brochures and tickets, if needed, at a slight discount for seeing the Natural Bridge in Rockbridge County, touring Chateau Morrisette Winery in Meadows of Dan or playing 18 holes at Hanging Rock Golf Club, he said.
For guests paying his regular weekend rate of $89, the hotel includes a full breakfast for two in its dining room. "We never had a need for it in the past," Carder said.
The Sheraton Inn Roanoke Airport also adopted what observers agreed is a value-oriented strategy by building an outdoor bandstand around which it throws a weekly "beach party" with three hours of live music. Buffalo wings, chips and pretzels are free, and there is no cover charge. A beer is $2; a burger and fries, $5.95. It is open to the public and guests. Hotel officials refused to discuss business conditions.
At the Marriott, the area's second largest hotel with 320 rooms, overall business is down slightly but the average room price is holding steady, manager Turk said. The bright spot is an upturn in groups staying at the hotel, which happens about every four years as different organizations move their events around the state, he said.
Front desk staff members are promoting more aggressively Marriott's frequent-traveler program, in which guests earn vacation, hotel and airline discounts. "The goal is to create brand loyalty," Turk said.
On the marketing side, "We keep a handle on new companies coming into the marketplace," Turk said. "There perhaps is a little bit larger need to do that now than in the past."
In its most recent upgrade, the Marriott last year redecorated guest and meeting rooms and corridors and brought in more fitness equipment. Turk said hotels perhaps now more than ever will reap the business they sow.
As for the future business of the beef producers, he said, "Whether they continue to use Hotel Roanoke or come back to us, we believe will be determined by the service they provide there, vs. the service we provide here."
"We believe we'll get our fair share of business back," Turk said.
While Hotel Roanoke endures criticism that it isn't pulling its own weight, it is making strides toward developing customers of its own.
A tourism official said she couldn't reveal the names of every organization booking an event but said they include the state chapter of the International Personnel Management Association. There will be between 150 and 200 people present when the group meets in the hotel for the first time next month, said Kelly Burd-Adams, director of convention sales for the Roanoke Valley Convention and Visitors Bureau.
An employee of Roanoke's municipal personnel office who is also a chapter member put events in motion to stage the event here. "That employee wanted to bring her organization to the valley," Burd-Adams said.
Area residents can do a lot to help the new hotel prosper by recommending it as a meeting place to local, state and national organizations to which they belong, Burd-Adams said. Often it takes a willingness to play host, but the hotel staff helps with details.
Another good sign, Burd-Adams said, is the return of the Virginia Realtors Association, which had met at Hotel Roanoke for years before the hotel closed in dilapidated condition in 1989, its future uncertain. The group tried other local venues but found them too small and began meeting elsewhere.
With the hotel reopened, the Realtors are coming back. The convention of 800 to 1,000 people is set for September 1997.
"We are seeing business return to the area, due to the meeting space that is available," Burd-Adams said.
Before Hotel Roanoke reopened, the Marriott had the largest meeting space - a ballroom that can seat 800. Hotel Roanoke's largest room holds 1,400.
The bureau is stressing the new conference facilities in its promotions about the Roanoke Valley to the many national organizations based in Washington, D.C., Burd-Adams said. She thinks they are beginning to pay attention but that results could be years away. Planners of group meetings often book events years in advance for logistical reasons.
That helps explain Hotel Roanoke's slow start. Although a sales office opened in October 1993, 18 months before the hotel, meeting planners "have a hard time buying it if they can't see it, taste it and touch it," Turk said.
Since Hotel Roanoke reopened, scouts for more than 100 potential groups have taken a guided tour, Walton said.
There's no way to know how many will return with actual conventions, but, "If we can get that decision maker on the property, we're that much closer to getting the sale," Crizer said.
by CNB