Times are good for airport hotels. Occupancy is up, rates are climbing and new competition is scarce. Meanwhile, owners are investing heavily in property refurbishments and planners are taking groups to airport hotels in bigger numbers than ever before.
"The airport hotel has a lot to offer groups," says Megan Barry, lead travel buyer for Maritz Travel. "We planners know that airport properties have a great cost-benefit ratio. Making sure the client has an exceptional experience within budget is what our job is all about. Airport properties can help make that happen."
The ability of airport hotels to make it happen for group clients is no surprise to the hotels themselves. Airport hotel occupancy climbed 4.3 percent in 2011 and rose another 2.5 percent during the first seven months of 2012, says Jan Freitag, senior vice president of STR. Airport hotel occupancy hit 73.4 percent in July compared to 70 percent for the U.S. hotel industry as a whole, while rates jumped 4.7 percent over July 2011 levels. That compares to a 3.5 percent rate increase for the industry overall.
But even as airport hotel rate increases outpaced the industry, the average daily rate was $93.52 in July compared to a national average of $107.44. That difference makes airport hotels a bargain compared to their downtown competitors in every segment, Barry says. Airport hotels typically offer more meeting and exhibition space per guest room than downtown or resort competitors, she adds, and airport hotels are more attuned to the needs and preferences of business and corporate event travelers than more-leisure-oriented competitors.
One thing planners won't see much of at airport properties is new construction. Denver is getting a 500-room Westin hotel and conference center at the airport and the Minneapolis-St. Paul International Airport is getting a new Radisson Blu. But the airport room supply is essentially flat, with 2,260 properties nationwide, Freitag says. Instead, airport properties are tempting planners with a heady menu of renovations and enhancements.
"People tend to think of airport hotels as they were 15 or 20 years ago," says Vincent Vito, director of sales and marketing at the 298-room Grand Hyatt DFW. "The perception issue means you may have to sell an airport property pretty intensively. But once we get a group here, our repeat rate is phenomenal."
Time is Money
Vito is selling the results of a $13 million renovation that targeted business travelers and groups. But he's not selling the renovation per se. He's selling location, budget and convenience that happen to come with a major upgrade attached.
"You can be in your room 10 minutes after you get to your gate," he says. "No other kind of hotel can even come close to that kind of convenience. And in this era of meeting more with a lower budget, that makes a difference to both planners and attendees. Our rates are consistent with anything you'd see downtown, but we offer tremendous time savings. Time is money for your attendees."
Time savings can also boost attendance. The typical group event sees attendance fall the last day as attendees fly out. Meeting schedules typically wrap by noon to allow attendees to get to the airport. At an airport hotel, meetings can continue to mid-afternoon or later and attendees still can make flights with time to spare.
"The airport location is appealing to corporate audiences," says Sheri Dierking, director of sales for the DoubleTree by Hilton Wichita Airport.
The 430-room DoubleTree—flagged just as a Hilton until earlier this year—is wrapping up a multi-year renovation program with a revamp of its multimedia theater and lobby. The property is across the street from Wichita's Mid-Continent Airport and has more than 22,000 square feet of event space.
"You can run meetings later with better attendance because you eliminate travel time to the airport," Dierking says. "And if you are meeting at an airport location, there is very often no need for a rental car. You can be in your room five minutes from the terminal and in your meeting room five minutes after that. Even in a city like Wichita where you can drive from one side of town to the other in 20 minutes, meeting at the airport is a tremendous time and money saver."
Airport hotels throughout the Midwest are renovating. In St. Louis, the Embassy Suites Hotel St. Louis Airport was closed, gutted and rebuilt from the walls out. In Bloomington, Minn., the 564-room Sheraton Bloomington Hotel Minneapolis South has been reflagged the DoubleTree by Hilton Bloomington-Minneapolis South.
The property is about 10 minutes from both Minneapolis-St. Paul International Airport and the Mall of America. It launched a $12.5 million renovation of guest rooms, public spaces and 70,000 square feet of meeting space. The DoubleTree is the third-largest event property in the Twin Cities, with 38 meeting rooms that can accommodate groups of up to 1,200.
Radisson is putting the finishing touches on the Radisson Blu Mall of America. One of the rare new-builds on the airport scene—and only the second Radisson Blu in North America—the 500-room property opens in March 2013. Planners have a skyway to Mall of America and more than 26,300 square feet of event space to work with.
"We are right across the freeway from the airport," says Marilyn Miller, director of sales and marketing at the Radisson Blu. "We are joining an elite group of airport hotels—Hilton, Embassy Suites, Marriott, Ramada and more—but we are the only property attached to the Mall of America. It is a rare attendee here who doesn't carve out an hour or two for Mall of America. Now attendees don't have to leave their event early to visit the largest mall in America," she says. "And with the Mall right there, planners don't have to worry about evening entertainment."
The mall is already an active event partner. Custom scavenger hunts take attendees throughout the mall on team-building and get-to-know-you programs, and planners are already booking the Nickelodeon Concourse for coffee breaks with Ferris wheel rides.
"It sounds silly," Miller says, "but it adds real pizzazz to the meeting. This is the kind of thing that can only happen here."
Booming in Chi-Town
The biggest news in airport hotels is happening in Chicago. Properties near O'Hare and Midway are investing heavily to take advantage of rising rates and busy schedules downtown.
"As the economy continues to improve and downtown hotels continue to boost prices, we are becoming a more and more attractive option," says Kerry Schlaack, director of sales and marketing for the Hyatt Regency O'Hare. "We can compete with any of the big boxes downtown. We are within walking distance of attractions and venues in Rosemont, Ill. You never have to be slowed down by traffic getting into downtown."
A $60 million renovation has given Schlaack more than 110,000 square feet of event space, including a standalone conference center with 17 venues designed for groups up to 350. More traditional event space can handle groups of 3,000.
Just down the street, Adam Korchek, area sales leader for the Chicago Marriott O'Hare, says all O'Hare airport properties are seeing a strong increase in demand.
It doesn't hurt that the Marriott is touting a $40 million renovation that revamped all event and meeting venues, adding a new 6,400-square-foot ballroom, updating all 470 guest rooms, and reinventing public spaces. Also giving the hotel a boost, the surrounding community of Rosemont has new restaurants, entertainment venues, a casino and visually appealing public spaces.
Meanwhile, Hyatt, Marriott and other O'Hare properties are renovating while they can.
A Chicago Convention Center, a multi-hotel complex and convention center complex planned for Rosemont, will boost both capacity and demand for the suburban Chicago location. The new development comes amid existing venues, including the Donald E Stephens Convention Center (840,000 square feet), the Rosemont Conference Center (92,000 square feet), Allstate Arena (18,500 seats) and 14 meeting hotels.
Airport properties near Midway are just as busy renovating. The Chicago Midway Hotel Center includes nine branded properties, with Marriott being the upgrade leader. The 200-room Chicago Marriott Midway is spending $4.5 million to upgrade guest rooms, meeting space and public areas. The 174-room Courtyard Chicago Midway Airport is spending $2.7 million to refurbish its facilities.
"We present ourselves as a budget-friendly proposition and a time-saver," says Lynn Dersley, director of sales and marketing for the two properties. "Instead of arranging to get people downtown with taxis or vans or a bus, you can get them meeting right now. That's a value proposition that no downtown hotel can meet."
Contributor Fred Gebhart has never attended a meeting in an airport hotel but likes the idea of not having to sit in downtown traffic.