Downtown Boston Sees Room Boom In Time For DNC

With the Democratic National Convention convening in Boston next week, a spotlight has been cast on the city's meetings and hotel facilities. While the $800 million Boston Convention and Exhibition Center opened last month, the 790-room Westin Hotel that Starwood Hotels & Resorts Worldwide agreed to build in conjunction with the new facility is not scheduled for completion until the third quarter of 2006. Four smaller, more targeted downtown hotels, however, have opened in the past three months and next week will be checking in DNC delegates. Totaling nearly 600 rooms, the four include two upscale properties, the Onyx and the Jurys Boston, as well as two midprice properties, the Hampton Inn & Suites Boston Crosstown Center and the Courtyard Boston Copley Square.

The new rooms come as Boston's hotel market starts to recover from an entrenched downturn. Boston suffered from the drop in group and transient business travel bookings starting in 2001, as did other key business destinations. Boston, however, already was hobbled before that: As home to a large number of high-tech companies, the city particularly was vulnerable when the dot-com bubble crashed in 2000, causing hotel occupancies and room revenues to sink long before the 2001 terrorist attacks.

While a rebound is underway, travel buyers bringing significant room night volume to Boston still are in a good negotiating position for 2005 rates. The entry of new properties means established hotels will seek to hold onto their marketshare, while the new arrivals try to attract corporate accounts with special introductory rates.

In May, occupancy rates in Boston hotels was up 9.2 percent over May 2003, while average daily rate increased 4.3 percent, according to Smith Travel Research. The increase in revenue per available room, which is a key determinant of profitability, was even more positive, jumping 13.8 percent.

While these performance numbers are healthy, they lagged behind the monthly performance turned in by such cities as New York, Washington, D.C., and Miami against which Boston competes, especially on the group side. In New York, for example, May occupancy, ADR and RevPAR jumped 10.7 percent, 14.3 percent and 26.6 percent, respectively, compared with the prior year.

The appeal to developers for new projects is understandable, according to Michael Fishbin, national director of Ernst & Young Hospitality Advisory Services. "Although Boston struggles to regain the occupancy and ADR levels it achieved previously, the market continues to be attractive for new development, primarily because of the formidable barriers to entry that have protected the market from oversupply," Fishbin said.

The 112-room Onyx, which opened in May, is in walking distance of corporate offices, as well as both local and state government offices. It is the second property in Boston for the San Francisco-based Kimpton Hotel & Restaurant Group. Kimpton's first entry in the market, the Hotel Marlowe, opened last year in nearby Cambridge.

"The dual openings are representative of our larger growth strategy," said Tom LaTour, chairman and CEO. "We identify a market such as Boston, which we feel is right for us, and take a saturation approach. While each property has its own identity, it helps build visibility for the Kimpton brand."

While the Onyx is a new build, the 220-room Jurys Boston is a conversion of a historic building, the 1920s-era former city police headquarters. It is the third Jurys property in the United States for the Dublin, Ireland-based Jurys Doyle Hotel Group, which already operates two Jurys hotels in the Washington, D.C., market. According to Lisa Tiernan, director of sales and marketing, the Boston Jurys, which opened this month, targets both individual and group business. Five meeting rooms encompassing 5,000 square feet of space are designed for small and midsize groups.

The 175-room Hampton, which opened in June, is located near the new convention center, as well as the city's medical center. The hotel is comprised of 119 standard guest rooms and 56 larger studio suites. Since it just opened, the hotel incorporates all of the "Make it Hampton" upgrades that the midprice brand announced in January in conjunction with its 20th anniversary. "These include new bedding, a complimentary hot buffet breakfast and complimentary high-speed Internet access, each of which our business travelers have told us is a high priority," said Phil Cordell, senior vice president for brand management for Hampton, which is part of Hilton Hotels Corp.

The 81-room Courtyard, which also opened in May, resembles the Jurys Boston in that it too is a historic conversion, though in this case the original building was a men's boarding house. For Marriott International, which operates the midprice Courtyard brand, the new hotel complements the 1,147-room Marriott Copley Square, which is located less than one block away.

Travel buyers who work with Marriott as a preferred supplier now have a lodging option for their corporate travelers whose budget may not allow for full service accommodations.

Despite the new competition, executives at established Boston hotels are confident that the positive performance this spring augurs well for the remainder of the year and into 2005. "We had a tough start to the year, but bookings improved by March and have continued beyond expectations," said Dick Mason, general manager of the Omni Parker House Hotel. "Rather than group leading transient or vice versa, we're seeing strength in both segments, which is heartening. International business travel also is picking up, really for the first time since 2001."

Hosting such an event as the Democratic National Convention is good both short- and long-term, said David Keamy, area director of marketing for Ritz-Carlton Hotels of Boston, which include the Ritz-Carlton Boston and Ritz-Carlton Boston Common. "The convention itself is a big demand generator, with some attendees extending their stays. But beyond that, it just brings a lot of attention to the city," he said. "It reminds travel buyers and meeting planners who may not have been here for awhile of just how much we have to offer. For citywide conventions, in particular, with the new convention center open, we see some sustained growth occurring."