LITTLE ROCK — Bookings at Little Rock hotels are almost back to pre-recession 2008 levels, according to occupancy numbers reported to the Little Rock Convention and Visitors Bureau over the past six months.
Between January and June, more than 57,700 room nights have been booked at Little Rock hotels. That’s a more-than-20,000 increase over the same time frame in 2011, when 36,800 rooms had been booked.
“Every single month this year, we’ve really exceeded our room nights over the previous few years,” said Alan Sims, the vice president of sales and services for the bureau. “We’ve finally hired a person for an open position on our sales team, and that should help us push ahead even more.”
The increase not only benefits the bureau - which operates and manages the Statehouse Convention Center, the Robinson Center and the Robinson Center Music Hall - but also the city overall.
Visitors who spend time in Little Rock for conventions tend to eat in the city’s restaurants and spend money at other local businesses, providing the city with additional sales-tax revenue.
And the timing for the boom is good for the city. In January, the city began collecting the voter-approved1 percentage-point increase in its sales tax and pumping more tax revenue into its departments, benefiting neighborhoods and streets across Little Rock.
The room-night numbers had been declining since the recession started in 2008. For the first six months of that year, the bureau booked 61,578 nights. For the same time frame in 2009, the bookings dropped to 56,702.
In 2010, bookings dropped to 49,361 for the first six-month period, and they hit a low at 36,872 in 2011.
Trends in room bookings are changing overall, Sims said, with fewer people booking rooms three or four years into the future. Most of the bookings made in the past six months have been for 2012 or 2013.
“People are still being cautious and watching the economy,” bureau Chief Executive Officer Gretchen Hall said. “The window has been significantly shortened for future bookings, and most of that can be connected back to the economy.”
As of June, more people had made same-year bookings in 2012 than in any other year in the past five years, according to bureau statistics.
The bureau also has worked to spur growth in bookings by hiring a company in Washington, D.C., to court national associations and sell Little Rock as an ideal setting for their conventions, meetings or trips. Several convention bookings have resulted, including a recent one for the Biscuit and Cracker Manufacturers’ Association of America.
Other big bookings included the U.S. Army Corps of Engineers conference, which booked 1,258 room nights; the Arkansas Activities Association, which booked 3,750 room nights; and the recent conference of the National Organization of Black Law Enforcement Executives. Room nights for the law enforcement conference, which is the largest of its kind nationwide, were not available Friday.
Bureau Chief Financial Officer Lisa Pulliam said that in June, for the second month this year, the bureau collected more than $1 million in hospitality tax. Hospitality tax is charged on prepared food such as restaurant meals and lodging such as hotels.
The increase in bookings played a role in that collection increase, she said. Other contributors included higher than-expected revenue from the bureau-operated parking facilities, she said.
The news is not all good for area hotels, however. The bureau is gearing up to fight a change in the federal General Services Administration formula that determines the amount of money a government worker can spend per day on a hotel, called a per diem.
The per-diem rate differs depending on the hotel market. The formula used since 2006 was an average of the daily rates of independent, midscale, upscale and upper upscale properties over a one year period between April and March of the previous year.
This year, partly because of a scandal involving General Services Administration employees paying extravagant amounts for hotel suites, restaurants and other add-ons during a convention in Las Vegas, the General Services Administration announced that it will adjust the rates by removing the upper upscale properties from the averages.
For most markets, the adjustment will likely lower the per-diem rate. Little Rock’s rate was $86 a night last year, down from $88 a night the previous three years.
“Where this is really going to affect us is not going to be federal government employees,” Hall said. “Most state governments also adopt the GSA’s suggested per diem for their travel as well, and that is a bigger market for our hotels.”
Sims said hotels can refuse to accept the per-diem rate, and many of the larger properties such as the Peabody Little Rock and the Capital Hotel do refuse those room rates. The employee is then left to call around and find smaller hotels willing to accept the rate or to go back to the procurement officer and ask him to adjust the per diem based on a lowest possible price of the person’s desired hotel market, Sims said.
“A lot of the time, they’ll just call around to avoid the hassle of saying, ‘This hotel is willing to charge $109, or $119 a night, you know, can you raise my per diem?’” he said.
Sims said government bookings make up about 10 percent of bookings for the Little Rock market, although calculating an exact figure wasn’t possible Friday because hotels often don’t keep track of their government bookings.
“For hotel markets like D.C., this has the potential to have a huge affect on their business,” Hall said of the revised rates. “Industry experts are estimating it could be as much as a 30 percent reduction. I don’t anticipate it having that kind of effect in Little Rock, but every dollar counts when you’re in an economy like this. For some of the smaller hotels, or those near the Air Force base, it could have a much larger effect.”
The bureau has written letters to the Arkansas congressional delegation to protest the new formula.
The new rates are scheduled to go into effect in October, and markets have until April to file appeals.
“The concern is currently [that] the government per diem rate is so low at $86 that there are only certain periods of the year that a potential government group could utilize the Statehouse Convention Center,” Sims said. “Other competing destinations with a much higher per diem, like Hot Springs at $101, have much more flexibility and fewer limitations allowing them to take more group business.”
Front Section, Pages 1 on 07/30/2012