March 18, 2019

No reservations about hotel growth

In his story for this issue "Hotels on the rise," News Editor Grant Welker points out hotels in the Worcester metropolitan region have increased their occupancy rates and average price per nightly stay, all while the room inventory has risen by 12 percent since 2014 from a combination of new hotels and expansions, doubling the national rate of growth.

Yet, there is concern from industry experts the hotel industry is heading for a slowdown; not necessarily reversing course but delivering much less robust growth. If demand slows, adding more hotels in Central Massachusetts will dilute healthy occupancy rates and could end up having significant negative impact on existing operators. This is a valid concern, but it is weighed against the growing appeal of the region, an increasing numbers of visitors, and the potential for more rooms making the area more competitive for larger meetings and conventions. The region, and in particular the city of Worcester, has traditionally had too few hotels, so we need additional growth.

A major factor in occupancy rates and pricing is the region's ability to attract conferences and large events, such as sports tournaments. The DCU Center in Worcester is an important economic engine as it can host large events, but the arena and its convention center have been historically hurt by the lack of available hotels in near proximity. You can't host a 5,000-attendee, multi-day conference if you don't have a reasonably close place for all those people to stay. With the DCU Center set to undergo up to $37 million in upgrades in order to remain competitive with its New England counterparts, now seems an opportune time to capitalize on developer interest. With Marlborough now having 11 hotels and 1,900 hotel rooms – after three opened in the last two years – it's clear the region does not lack for demand.

Worcester should challenge new hotel developers, especially in the urban core, to be part of the creative economy. A very innovative hotel operator – 21c Hotels – has created a business model of reusing historic properties in the South and Midwest and turning them into combined hotels and art galleries. With all of the older buildings in our region and the emerging role the creative economy is playing in contributing to our momentum, an operator like 21c could thrive in this region. While having more of the large hotel chains fills the bill of adding rooms, we would encourage any new developments to think about creating unique spaces leaving a lasting impression on visitors. The Beechwood Hotel in Worcester, while it does not have a separate gallery, is full of art and creative, local touches. Although details have yet to be revealed, the firm behind the mixed-use development at the new Worcester Red Sox stadium is describing one of their planned properties as a boutique hotel. This is encouraging.

Hotels play an important role in the economy, and the visitors who use them pay a lot in taxes and will spend their money in businesses around the region. While the local hotel industry can't expect the recent growth to continue forever, a prudent expansion of inventory should lift all boats.


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