REPORT FROM THE U.S.—When the Hyatt Regency New Orleans begins welcoming guests in October, its reopening will mark more than a win for the property’s franchisor and owner. As one of the last major hotels to shed the scars of Katrina, its reemergence will represent a triumph for the city’s hospitality industry.
Indeed, the market has come a long way since the torrential rains and gale-force winds closed 273 properties in affected coastal areas and the global economic recession ground subsequent development efforts to a halt.
Nearly 200 of those hotels have since reopened, according to an analysis conducted by STR’s North America Census Department.
*Some properties have since reclosed or been converted into other property types (e.g. private residences)
Significant progress has been made in the New Orleans market in particular, where the injection of 1,193 guestrooms from the Hyatt Regency will boost the city’s supply up to 36,394 rooms—down only 2,326 from the peak in 2005, according to data from STR, parent company of HotelNewsNow.com.
New Orleans* hotel supply
| Existing | ||||
| Projects | Rooms | |||
| Pre-Katrina | 266 | 38,720 | ||
| May 2011 | 256 | 35,201 | ||
*Includes the following market tracts: New Orleans CBD/French Quarter; New Orleans East/Slidell; New Orleans Metarie/Airport
Market performance
Performance, too, has seen a comeback. After a dismal 2009, during which occupancy fell 8.1%, average daily rate dropped 3.9% and revenue per available room plummeted 11.7%, the market posted considerable gains in 2010 and the first half of this year.
New Orleans was also the first top U.S. hotel market to surpass its September 2008 trailing-12 month revenue per available room peak, according to STR Analytics, sister company of HotelNewsNow.com. After reporting a RevPAR of US$75.53 approximately a year and a half ago, the city’s hotels hit a mark of US$77.95 in April of this year.
The traditionally front-loaded market undoubtedly received an added boost from Mardi Gras. From 4-8 March 2011, a record-setting 103,000 roomnights were sold (compared to 102,327 roomnights sold during the same period in 2005), according to STR.
At the InterContinental New Orleans, transient revenue during the first six months of the year was up 20%, said Andrew Done, the property’s director of sales and marketing.
“There was pent up demand for New Orleans,” he added.
“Ever since the Super Bowl (which the New Orleans Saints won in 2010), we’ve seen this surge in leisure demand,” added Martin Driskell, the hotel’s GM and president of the Greater New Orleans Hotel & Lodging Association.
Convention business, on the other hand, was a bit slower going.
Meetings and conventions
The New Orleans hotel market lacks a large base of corporate headquarters to draw in business travel—a source of demand it typically makes up for through citywide conventions. But when Katrina hit, it disrupted the five-year booking cycle of major meetings and events, a shock from which the market is only now recovering, Done said.
“New Orleans lives and dies by the convention business, and so do we,” he said.
The total number of meetings, not including those booked directly into hotels, was only 360 in 2006. The market gained a step the following year with 607 meetings, and by 2008 had attracted 705. Thus far in 2011, there have been 676 meetings that have either occurred or are on the books, according to the New Orleans Metropolitan Convention and Visitors Bureau.
“The city has hosted several attendance-breaking citywide conventions this spring and is anticipating 2011 to be at or above the same level of convention roomnights as last year,” said Nikki Moon, the CVB’s VP of convention sales. “With a robust calendar of conventions as well as the list of premium sporting events here in 2012 and 2013, New Orleans has the strongest convention calendar we have seen in years over the next 24 months. “
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Michael Smith GM Hyatt Regency New Orleans |
New Orleans will host six major sporting events between January 2012 and March 2013, including two Sugar Bowls, the BCS Championship, both the Men’s and Women’s NCAA Final Four, and the 2013 Super Bowl.
The team overseeing development at the Hyatt Regency seems to have taken these demand generators into account. As part of a US$275-million renovation, the hotel will reopen with two 25,000-square-foot ballrooms, 64 versatile meeting and banquet rooms, 21 executive level meeting rooms, seven permanent boardrooms, and more than 80,000 square feet of exhibition space, highlighted by a new 50,000-square-foot exhibit hall, according to Michael Smith, the property’s GM.
“As one of the most significant hospitality developments in New Orleans in over a decade, we will reopen as the city’s premier meeting and convention hotel,” he said.
The opening will coincide with the nearly US$8 billion in economic development along Loyola Avenue—on which the hotel features a prominent new entrance, Smith added.
Also on the horizon are a new medical district and a 300th anniversary in 2018.
“The city is investing a lot in infrastructure, bringing tourism numbers back to where it was in the early 2000s,” Done said.
The progress should be enough to dispel any lingering doubts or perceptions about the city.
“We still have that perception issue that the city is not back or that it could happen any day that we could have another disaster,” Done said. “That’s the biggest hurdle we’ve got to get past.”
But, for the most part, Driskell said, “That’s pretty much in our rearview mirror.”