U.S. Hotel Appraisals Hotel Market Snapshot: Columbus, Ohio
Columbus has seen quite a bit of development activity over the past few years, including the introduction of several new hotels. Will the demand created by these new projects be enough to fill the city’s rooms?
by Stacey Nadolny
A lodging market is only as strong as its cornerstones of demand, and in this respect, Ohio’s state capital of Columbus has the fundamental elements to create success for local hotels. State government operations, the headquarters of six Fortune 500 and nine Fortune 1000 companies, a convention center that hosts millions of visitors annually, and The Ohio State University—with one of the largest undergraduate enrollments in the country—all leverage a significant economic impact. The following highlights new developments in Columbus and the effects that these and other demand generators are having on local hotels.
Hotel Performance since the Recession
Like so many others across the country, the Columbus lodging market hit bottom in 2009 under the increasing weight of the recession. Average rates fell along with occupancy, as local hotels offered steep discounts in an attempt to compete for what little demand could be found. The situation improved in 2010, with occupancy making a strong recovery. Occupancy improved across all three demand segments: commercial demand returned as the area’s major financial, research, and government agencies rebounded after travel furloughs; the meeting and group segment saw increased activity with more convention participants (despite fewer conventions), as well as increases in OSU-related events and corporate events; and visitor statistics rose at some of the city’s top attractions. This increased demand was coupled with relatively flat supply growth, as much of the area’s new supply had already come online in 2008 and 2009. Average rates increased as well, albeit more grudgingly, in 2010, but rate growth is expected to gain momentum through the end of 2011 and into 2012.
Revitalization Downtown and New Hotels in Columbus
Downtown Columbus has undergone some significant changes over the past two years that have helped the city’s economy and hotels rebound from the recession. Major developments include the construction of Huntington Park, the city’s AAA-baseball stadium and home of the Columbus Clippers; the July 2011 opening of the Scioto Mile, a riverfront revitalization district that connects Downtown Columbus to the Scioto River; a new Franklin County Courthouse; a new 120-unit apartment development; and the Columbus Commons, a green space project on the site of the former City Centre Mall. While these new developments will directly generate only a modest number of room nights, they add significant appeal to the Downtown Columbus lodging market by encouraging pedestrian activity and a more “urban” feel that should attract greater numbers on nights and weekends.
In 2008, casino gambling was approved for the state of Ohio; however, the logistics of a Columbus casino project have been debated and the development held up in legal battles for the last three years. The project is finally moving forward again, with site work underway and an anticipated opening sometime in late 2012. This casino is expected to be a major economic driver for the city, bringing a new stream of leisure travelers to local hotels.
Columbus also has several new hotel projects in the works, most notably the 532-room Hilton Convention Center Hotel, which is slated to open in the fall of 2012. A Holiday Inn Express is expected to open in the fall of 2011, joining four other properties that have opened in the Polaris market on the city’s north side within the past three years. Just outside of Downtown, a SpringHill Suites opened in late August in Grandview Heights and will serve the OSU and OSU Medical Center campuses. On the west side, a Fairfield Inn & Suites, which has suffered several delays in construction over the past two years, is reportedly slated for completion by the end of 2011.
Meeting and Group Demand
While the Greater Columbus Convention Center (GCCC) serves as the primary meeting and group function space in the city, facilities in the Polaris, Easton, Worthington, Tuttle Mall, and University District areas can also accommodate large functions. Most of the events related to OSU take place on campus; however, there is only one on-campus hotel, and these events provide significant overflow to the University District hotels. While the majority of the remaining suburban conference space caters to SMERFE and smaller-scale corporate meetings, the Downtown Columbus market hosts a variety of state association and national-scale events.
The GCCC saw a major decrease in conventions in 2009 and 2010, and while convention attendance was up last year, it was still well below the center’s peak attendance levels. In the long term, the new convention hotel should raise the city’s profile for large group bookings and help bring significant convention-related demand into the downtown market. Initial room-night booking reports for the Hilton have been below expectations from an occupancy perspective, no doubt a result of the instability of the national economy at present. Still, the hotel is reportedly commanding higher rates than Hilton had originally projected.
Conclusion
Though the brooding national economic climate tempers outright optimism, the outlook for Columbus’ lodging landscape seems anything but grim. Most of the hotel supply that opened in the last 18 months has been quickly absorbed in each respective submarket, and while the new Hilton’s 532 guestrooms will make a make a big impact on the downtown area’s hotel supply in late 2012, officials anticipate that this new hotel will shift the dynamics in a positive direction as convention demand returns in force. Overall, higher education, government, business, and conventions remain firmly in place in Columbus, giving the city’s hotels a solid grounding at present and hopefully propping them up in the future.
Columbus has seen quite a bit of development activity over the past few years, including the introduction of several new hotels. Will the demand created by these new projects be enough to fill the city’s rooms?
by Stacey Nadolny
A lodging market is only as strong as its cornerstones of demand, and in this respect, Ohio’s state capital of Columbus has the fundamental elements to create success for local hotels. State government operations, the headquarters of six Fortune 500 and nine Fortune 1000 companies, a convention center that hosts millions of visitors annually, and The Ohio State University—with one of the largest undergraduate enrollments in the country—all leverage a significant economic impact. The following highlights new developments in Columbus and the effects that these and other demand generators are having on local hotels.
Hotel Performance since the Recession
Like so many others across the country, the Columbus lodging market hit bottom in 2009 under the increasing weight of the recession. Average rates fell along with occupancy, as local hotels offered steep discounts in an attempt to compete for what little demand could be found. The situation improved in 2010, with occupancy making a strong recovery. Occupancy improved across all three demand segments: commercial demand returned as the area’s major financial, research, and government agencies rebounded after travel furloughs; the meeting and group segment saw increased activity with more convention participants (despite fewer conventions), as well as increases in OSU-related events and corporate events; and visitor statistics rose at some of the city’s top attractions. This increased demand was coupled with relatively flat supply growth, as much of the area’s new supply had already come online in 2008 and 2009. Average rates increased as well, albeit more grudgingly, in 2010, but rate growth is expected to gain momentum through the end of 2011 and into 2012.
Revitalization Downtown and New Hotels in Columbus
Downtown Columbus has undergone some significant changes over the past two years that have helped the city’s economy and hotels rebound from the recession. Major developments include the construction of Huntington Park, the city’s AAA-baseball stadium and home of the Columbus Clippers; the July 2011 opening of the Scioto Mile, a riverfront revitalization district that connects Downtown Columbus to the Scioto River; a new Franklin County Courthouse; a new 120-unit apartment development; and the Columbus Commons, a green space project on the site of the former City Centre Mall. While these new developments will directly generate only a modest number of room nights, they add significant appeal to the Downtown Columbus lodging market by encouraging pedestrian activity and a more “urban” feel that should attract greater numbers on nights and weekends.
In 2008, casino gambling was approved for the state of Ohio; however, the logistics of a Columbus casino project have been debated and the development held up in legal battles for the last three years. The project is finally moving forward again, with site work underway and an anticipated opening sometime in late 2012. This casino is expected to be a major economic driver for the city, bringing a new stream of leisure travelers to local hotels.
Columbus also has several new hotel projects in the works, most notably the 532-room Hilton Convention Center Hotel, which is slated to open in the fall of 2012. A Holiday Inn Express is expected to open in the fall of 2011, joining four other properties that have opened in the Polaris market on the city’s north side within the past three years. Just outside of Downtown, a SpringHill Suites opened in late August in Grandview Heights and will serve the OSU and OSU Medical Center campuses. On the west side, a Fairfield Inn & Suites, which has suffered several delays in construction over the past two years, is reportedly slated for completion by the end of 2011.
Meeting and Group Demand
While the Greater Columbus Convention Center (GCCC) serves as the primary meeting and group function space in the city, facilities in the Polaris, Easton, Worthington, Tuttle Mall, and University District areas can also accommodate large functions. Most of the events related to OSU take place on campus; however, there is only one on-campus hotel, and these events provide significant overflow to the University District hotels. While the majority of the remaining suburban conference space caters to SMERFE and smaller-scale corporate meetings, the Downtown Columbus market hosts a variety of state association and national-scale events.
The GCCC saw a major decrease in conventions in 2009 and 2010, and while convention attendance was up last year, it was still well below the center’s peak attendance levels. In the long term, the new convention hotel should raise the city’s profile for large group bookings and help bring significant convention-related demand into the downtown market. Initial room-night booking reports for the Hilton have been below expectations from an occupancy perspective, no doubt a result of the instability of the national economy at present. Still, the hotel is reportedly commanding higher rates than Hilton had originally projected.
Conclusion
Though the brooding national economic climate tempers outright optimism, the outlook for Columbus’ lodging landscape seems anything but grim. Most of the hotel supply that opened in the last 18 months has been quickly absorbed in each respective submarket, and while the new Hilton’s 532 guestrooms will make a make a big impact on the downtown area’s hotel supply in late 2012, officials anticipate that this new hotel will shift the dynamics in a positive direction as convention demand returns in force. Overall, higher education, government, business, and conventions remain firmly in place in Columbus, giving the city’s hotels a solid grounding at present and hopefully propping them up in the future.
About the Author:
Stacey Nadolny is the Managing Director of the U.S. Hotel Appraisals hotel consulting and valuation office in Columbus, Ohio. Stacey graduated from Cornell University’s School of Hotel Administration and has worked on consulting and appraisal assignments for more than 100 properties across the U.S. Contact Stacey at (419) 367-3879 or snadolny@ushotelappraisals.com.