Hotel-occupancy rates in the Spokane area are holding up this year at about the same level as last year, despite the down year projected for the industry, and have allowed some hoteliers to raise room rates.


Because of that, revenue per available room, a hotel-industry performance measurement known in the trade as RevPAR, has shown marked improvement.


Both better-than-expected occupancy rates and improved RevPAR could be signs of an upswing in the hotel industry, says Harry Sladich Jr., president and CEO of the Spokane Regional Convention and Visitors Bureau.


The forecast for 2005 was that it was going to be a dismal year, Sladich says. Occupancy rates are just about flat, and RevPAR is up. The hotels are excited about that.


A report completed recently by Smith Travel Research, a Hendersonville, Tenn.-based national research company, shows that through August, the Spokane-area hotel-occupancy rate was 60.8 percent, nearly the same as the 61.1 percent occupancy rate through the first eight months of 2004.


In the same period, however, the Spokane-area RevPAR increased to $42.50, up more than 4 percent from $40.75 in the year-earlier period, Smith Travel says.


Meanwhile, room-tax revenues collected in the city of Spokane, city of Spokane Valley, and Spokane County show a similar trend. Those tax revenues collected through the first seven months of this year, the most recent period for which data were available, were up almost 4 percent compared with the year-earlier period.


Not all in the industry, however, are pleased with the level occupancy rates and bump in room rates. Walt Worthy, who owns the Davenport Hotel, in downtown Spokane, with his wife, Karen, says the luxury hotel hasnt seen as much activity as they had hoped this year.


Were still doing well, but not quite as well as we projected, Worthy says. Its been rather flat, and we anticipate the same thing next year.


He says the hotel has boosted room rates modestly, but nothing to write home about.


In general, Worthy attributes the Davenports disappointing year to a falloff in group bookings this year, compared with 2004. Group business, which typically is booked a year or more in advance, appears as though it will be about the same in 2006 as in 2005, Worth says.


The results, however, arent deterring the Worthys from moving ahead quickly with the 18-story, 300-room Davenport Towers & Residences, at the southeast corner of Post Street and First Avenue, cater-corned from the historic Davenport Hotel. Construction of that building has started, and Worthy says he expects the building to be completed in the third quarter of next year.


Demand up, construction down


The revenue-per-room increase cited in the Smith survey is due largely to two factors, industry experts here say: The number of hotel rooms in the Spokane area has remained nearly the same this year as it was last year, and hoteliers are commanding more money for their rooms.


According to the Smith survey, the inventory of rooms in the Spokane area increased by only 0.5 percent this year, compared with last year. That means that of the 6,728 guest rooms in its hotel census, only about 35 are new. The 36-room Montvale Hotel, which reopened early this year downtown, could account for the entire increase.


John Taffin, executive vice president of hotel operations at Spokane-based Red Lion Hotels Corp., says slow growth in the number of hotel rooms being added here jibes with a national trend of hotel-room supply growing by about 1 percent annually over the last couple of years. He says new construction is growing at a slower rate than consumer demand for hotel rooms nationally, which is increasing by 3 percent to 5 percent.


Taffin says that with high construction costs making new hotels more expensive to develop, many hoteliers either are rebranding hotels they already have or are buying established hotels and remodeling or rebranding them.


Red Lion, which until recently was called WestCoast Hospitality Corp., is spending $40 million to rebrand its WestCoast hotels as Red Lions and making other improvements to the hotels in its chain. The company expects to have all of those improvements completed by the middle of next year. Also recently, the company has agreed to sell seven of its hotels in the Pacific Northwest to other operators.


Taffin says slow growth in hotel construction isnt likely to change in the next two years, and occupancy rates and RevPAR likely will continue to rise.


The industry will see healthy times over the next couple of years, Taffin says.


He says the industry still has a ways to go, however, before it reaches the room rates and activity it had before the Sept. 11 terrorist attacks.


In Spokane, a few hotel projectsin addition to Worthys big downtown projecthave been announced, but for the most part, construction of those projects either is just getting under way or hasnt started yet. Those projects include an 80-unit Holiday Inn Express, in Cheney, and a 60-unit Stratford Suites Inn, in Airway Heights. Also, developers have talked of hopes to build hotels at the Interstate 90-Medical Lake interchange, west of Spokane, and fronting on I-90 just east of the Sullivan Road interchange, in Spokane Valley, but details on those projects havent been announced yet.


More Web savvy


Sladich says one reason hoteliers are commanding higher prices for their rooms is that they have become more savvy in their use of travel Web sites, such as Expedia.com and Travelocity.com. Those kinds of sites, which include rates and information about a number of competing hotels, are referred to in the industry as third-party intermediaries.


When such Web sites first became popular a few years ago, Sladich says many hotel companies made their rooms available on the sites at deeply discounted rates to fill them. By doing so, however, the companies created an environment in which consumers expected to be able to find rooms at prices far below standard rates.


Since then, some companies have stopped trying to compete on price with other hoteliers, and have listed their rooms at market rates, Sladich says. Others have stopped using such sites altogether and marketed their own Web sites more heavily, in some cases adopting policies that the lowest prices for their rooms will be found on their own sites, he says.


Some of those hotels still will dump excess rooms on auction sites, such as Priceline.com, where a consumer bids on a hotel room of a certain quality in a given area, but doesnt know precisely what hotel their room is at until their bid is accepted, Sladich says.


Taffin says Red Lion still uses third-party intermediaries, but has a policy that its lowest rates will be found on its own Web site. Marketing properties on travel sites is important, he says, because many travelers peruse such sites as their only source of information about what hotels are in an area. If a companys hotels arent on those sites, he says, a traveler might not know a hotelier has a presence in a given market.


Red Lion revamped its own Web site recently and tries to use the travel sites to guide potential guests to its own site.


If you manage your inventory well, you can use them from a marketing perspective, Taffin says. We think theres a place for them.