Hilton Milwaukee City Center in downtown Milwaukee. Photo credit: VISIT Milwaukee
Like downtown Milwaukee As hotels move from the busy summer season to the fall and winter months, industry experts see a mix of dark clouds and bright spots on the horizon.
Milwaukee has not been spared the economic catastrophe that wrought with the COVID-19 pandemic last year. But the summer of 2021 has revitalized the local hotel market thanks to the return of leisure travel.
Greg Marcus, chief executive officer of Milwaukee-based Marcus Corp., said his company’s hotels returned to near 2019 levels this summer after hitting hard for much of last year.
Marcus Corp. owns three hotel properties in downtown Milwaukee including the Hilton Milwaukee City Center, the Pfister Hotel and the Saint Kate-The Arts Hotel. They benefited from major sporting events like the Bucks NBA championship run and the Ryder Cup, as well as the return of small events like weddings.
However, the company also expects the usual seasonal slowdown in business in the coming months, which could be exacerbated by the continued absence of business travelers.
“In a way, we’ve seen some recovery,” Marcus said during a recent Milwaukee Press Club event. “But now we won’t experience as much relaxation in autumn and winter because we won’t have the business travelers.”
Milwaukee hotels typically turn their attention to business travel at this time of year. But COVID-19 – and recently also the Delta variant – still keeps them away.
“What happened to the Delta variant, many companies large and small have postponed their return to the office, which gives a business traveler less reason to make a sale or meet with a customer when that customer is not going to be in the office,” said Doug Nysse, Hotel Specialist and Director of Project and Development Services at Colliers | Wisconsin.
The prevailing opinion in the industry is that business travel, which was once expected to return in significant proportions by the fall, could be postponed to early 2022, said Greg Hanis, hotel industry analyst and president of New Berlin-based Hospitality Marketers International Inc.
This may be acceptable for markets where the weather is warm and hotel demand doesn’t wane in the winter, but it could mean Milwaukee won’t see any real surge out of this segment of the market by late spring.
“I think this is going to be a really big question mark for the hospitality (industry) recovery,” said Hanis.
A review of hotel industry data shows that downtown Milwaukee hotels occupy more rooms than last year, but are still below pre-pandemic levels.
According to market data from STR Inc., based in Hendersonville, Tennessee, downtown hotels were between 50 and 60 percent full from early August through the week of August 29 through September. 4th
This is a difference compared to the same period in 2019, in which hotels were at least three-quarters full, minus the beginning of September (66%). But it was an improvement on the 2020 numbers when the occupancy was in the 30% range.
Hanis also found another positive result in the market data. The average daily rates, i.e. the prices that hotels charge for overnight stays, were about the same or even higher in a few weeks compared to 2019.
Average daily rates between August and early September ranged from $ 150 per night to nearly $ 174. This compares to 2019 prices, which ranged from roughly $ 153 to $ 167.
This trend can be seen across the country and shows that the hotels in the market have been confident enough to keep prices high, Hanis said.
“As a result, if they had discounted rates, revenue may not go down as much as occupancy,” he said.
The staff shortage has also had an impact on the hotel business, which has led hotel operators to make difficult decisions about their operations, Nysse said.
“Hoteliers are trying to cut labor costs by reducing their staff by painting or removing amenities,” he said.
Reduced services could take the form of less frequent room cleaning or the discontinuation of certain food and drink offers.
As the warm weather subsides and with it the leisure travel, Hanis sums up the hotel market as follows:
“The sky has been cloudy, but we don’t know if a rainstorm is coming or if it’s just a cloudy day and we have to work on it in the fall,” he said. “We don’t know the real long-term effect.”
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