THE INN ZONE:

New attractions may boost occupancy

Lodging Industry Update guests hear positive forecast for Memphis.

Operators of Greater Memphis’ 22,470 hotel rooms are poised for a banner year in 2016 after barely missing the mark last year.

While the U.S. hotel industry had a record year by all measures in 2015, Memphis couldn’t quite equal a 2014 performance that was the strongest in at least 25 years.

Occupancy fell slightly, from 65 percent to 64.6 percent, but Memphis hotel consu lta nt Chuck Pinkowski predicted Friday it will rebound to 65. 5 percent in 2016.

That would put Memphis solidly within a national growth trend that’s expected to continue despite economic uncertainty.

The national and local forecasts were discussed during the 18th annual Lodging Industry Update, organized by Pinkowski & Company and the Metropolitan Memphis Hotel & Lodging Association, at Hilton Memphis.

Memphis Convention & Visitors Bureau president Kevin Kane said he was satisfied area hotels retained most of 2014’s gains.

The industry stands ready to benefit this year from new drawing cards including blues and Memphis music museums, Bass Pro Shops at The Pyramid, The Guest House at Graceland and the Memphis Zoo’s Zambezi River Hippo Camp, Kane said.

Isaac Collazo, Intercontinental Hotel Group vice president of performance strategy and planning, cited stock market turmoil and a lower corporate profit forecast as headwinds that hoteliers should monitor.

But Collazo said there’s a disconnect between analysts’ negative outlooks and economic realities that are fueling hotel industry growth.

With the economy adding jobs and unemployment declining, “We think these are the positives and these are the things matter- ing most on Main Street: that people have jobs, and if they have jobs, they spend,” Collazo said.

U.S. hotels set records in 2015 for occupancy, revenue per available room and overall room revenues, among other measures, but hotel stocks included in the Baird/STR Hotel Index dropped 20 percent in value in 2015 and another 12 percent in January.

Jeff Higley of STR Global, who serves as editorial director of HotelNewsNow.com, projected across-the-board improvements again this year but sounded a cautionary note about continued increases in the supply of rooms nationally.

Higley said a hotel-building binge of recent years could create an oversupply a year or two down the road. Too many rooms could hurt occupancy and revenue numbers.

Pinkowski predicted average daily rates in the Memphis area — Shelby, DeSoto and Crittenden counties — would rise 4.6 percent in 2016, to $93, and revenue per available room would increase 6.1 percent, to $60.92.

Pinkowski said 19 hotels are currently in the Memphis area pipeline, including 13 Downtown and four in Germantown, but experience suggests only 40 to 45 percent of those will actually be completed.

The Downtown projects

would add about 1,600 rooms in a submarket that has about 2,900 rooms. Pinkowski said he expects 600-700 rooms could realistically come on line Downtown in the next couple years.

The Land Use Control Board on Thursday approved three hotels that would bring about 375 rooms to Downtown: Hilton Garden Inn and Holiday Inn Express on Union between Third and Fourth, and Homewood Suites by Hilton at Second and Vance.

Pinkowski said his nearterm forecast also counts a La Quinta on Monroe, an Ascend at 179 Madison and a Curio by Hilton at Central Station.