Rising Competition Hurts Atlanta Hotels

<B> Rising Competition Hurts Atlanta Hotels</B>

By Rowland Stiteler

An increase in the number of hotel rooms being built in Atlanta has driven occupancy down and has fueled bargains according to studies by two consulting firms in the lodging industry.

A study by Smith Travel Research shows that the city's average occupancy rate dropped from 67.2 percent in 1996 to 63.9 percent in 1997, while average room rates over the same period declined by almost 6 percent, to $76.50.

The report also showed that the average price of a luxury hotel room dropped 4.7 percent, to $122.98 a night in 1997, while the average price of an economy room fell by 11.7 percent to $46.62.

"The reason for the decline is the tremendous amount of new hotels that have opened in recent years," said Mark Woodworth, executive vice president and director of the Atlanta office of PKF Consulting, which reported similar data.

"What we have is a situation where the number of new hotel rooms is growing faster than the growth in hotel guests," Woodworth said, though "the declining occupancy does not mean a decline in visitation to Atlanta."

Indeed, inbound travel is up, said Atlanta Convention and Visitors Bureau president Spurgeon Richardson.

"With all the visitors we hosted during the Olympics in 1996, it's great that even more people visited Atlanta in 1997," he said.

The PKF study showed that the number of hotel rooms in Atlanta in 1997 jumped by 8.8 percent over 1996, compared with a national average increase of 3.2 percent.

The more competitive situation also is manifesting itself in the form of more money being spent on hotel renovations and expansions, Woodsworth said.

About six major hotels in Atlanta are renovating, with the largest project being a $24 million upgrade at the Westin Peachtree Plaza. Other major hotel property renovations and expansions include the Atlanta Hilton and Towers, the Atlanta Marriott Marquis, the Four Seasons Atlanta and the Georgia Terrace.