Hotels see small gain from last year, hope for better future

Hotel Baker’s “awesome year” was 2007, said owner Rowena Salas.

“I think back then things were great,” she said. “We were a little fat and top-heavy ... But we could (be) back then and life was good.”

But since then, the hotel industry has fallen on hard times, with 2009 being especially rough. Atlanta-based PKF Hospitality Research group reported that was the year the U.S. lodging industry saw its greatest annual decline in revenue since the Great Depression.

Now, as the 2010-11 fiscal year nears its end, The outlook for hotels may be improving. Amy Egolf, executive director of the St. Charles Conventions and Visitors Bureau, said tax revenues for hotels in the greater St. Charles area — including Elburn, Campton Hills and St. Charles Township — are up about $11,000 from the same point last year.

Egolf said there are roughly 12 hotels in the city. She said numbers from the Governor’s Conference on Tourism, which she attended in mid-March, show tax revenue for Illinois hotels are trending 9 percent higher this year over all of last year.

“Those are good indications for us,” Egolf said. “I think that it can probably point to everybody ... feeling a little bit hopeful about the economy.”

Egolf said at this point in the year, the numbers have more to do with business travel than leisure travel. She said companies may be more willing to spend money on sending people to meetings and conferences than they were last year, but it’s still too early to tell if this means a better future for the hotel industry in St. Charles.

“But so long as this trend continues, it should bode very well for the rest of the calendar year,” Egolf said.

Salas said that the Hotel Baker’s goal for this year is getting back to those 2007 numbers. She said as an owner, she has to watch how money is spent, but has started seeing more corporate clients coming to the hotel.

“I think our numbers are going to be great for this year,” Salas said. “I was going into this year with a lot of hope and I think I’m going to meeting my goal I’ve set for myself. Looking back at the 2007 numbers, I think we could reach that again.”

Salas said Hotel Baker management has been focusing on what they feel the venue is good at: weddings and entertaining corporate visitors. She said management has tried honing in on marketing what gives better returns. Salas said managers are renovating rooms and bringing back nicities such as turn-down service.

“The executives (that stay at Hotel Baker) spend,” Salas said. “They want everything great for themselves. ... I wanted to make sure we make it comfortable for them.”

For St. Charles officials, hearing about Hotel Baker and the general landscape of hotels improving is good news. The city generates 3 percent of its budget from a hotel and motel tax.

Chris Aiston, the city’s director for economic development, said the industry isn’t nearly where it was in 2007, but calls this increase a  “clear sign” that businesses are willing and able to pay more.

“It’s another small pickup and another sign that the economy is slowly but surely improving,” Aiston said. “I don’t know any community anywhere near us that has as many hotels as we have ... so it’s important obviously that it remains strong and it’s returning to where we’d like to see.”

St. Charles Mayor Donald DeWitte said that even though the hotel and motel tax seems small at three percent, any uptick is “absolutely” a big deal.

“It’s well over a million (dollars) each year typically in revenue generated,” DeWitte said. “In a $40 or $42 million revenue stream, that’s a significant amount of money.”

DeWitte said city leaders are cautiously optimistic that the uptick will continue. He said city officials are tying to make St. Charles  a destination where people will want to stay for a weekend and spend some money.

Aiston said consumers have been willing to travel and spend more because consumer confidence has been up. The Conference Board’s Consumer Confidence Index supports his theory. It had its highest number in three years — 72 percent in February. However, the number dipped to 63.4 percent in March.

Egolf knows that while the economy has been better lately, nothing comes easy. She said the hotel industry took a big hit after Sept. 11, 2001 and she now knows that business can go from good to bad rather quickly.

“We never want to take (good times) for granted again because we saw what could happen,” Egolf said. “The increase in gasoline cost might have an impact on us. We hope it doesn’t, but you don’t know.”

Egolf said during the Governors Conference, Roger Dow— head of the U.S. Travel Association — said hotel rates will be restored to their 2007-08 rates in 2012-13, but the recent rise in gas prices, which could climb to $5 per gallon, could impact his prediction.

“At this point, I don’t think any of us (in the hotel industry) ... are going to be comfortable painting a wonderfully rosy picture,” Egolf said.

Even so, Egolf said the those in the hotel industry are hopeful. The numbers look good locally and state-wide, and she said she doesn’t want to take that for granted.

Salas said she hopes this increase isn’t just an aberration.

“I’d hate to go backwards,” she said. “I think to wish for what we had a couple years ago when it was so great, that will be a couple years from now. I don’t think we’re back to where we were. It’s not going to be easy.”

Still, Salas said the outlook doesn’t have to be all bad.

“Yeah, it’s grim out there, however it doesn’t have to be grim at Hotel Baker,” she said. “You (can’t) just wallow in your misery. You can just watch it happen or you can make it happen.”

What does it mean locally?
The hotel tax makes up 4 percent of the city of St. Charles’ budget.

Breakdown of the hotel and motel tax collected
2010-11* $1,291,201
2009-10 $1,624,075
2008-09 $1,737,237
2007-08 $2,047,977
* Sans February, March and April 2011 numbers.

Kane County numbers
Kane County was fifth in the state in domestic traveler expenditures in 2009 with $384 million. This was a 3.7 percent decrease from 2008.
Source: Economic Impact of Travel on Illinois Counties 2009

Greater St. Charles Conventions and Visitors Bureau rundown
- There are 2,402 hotel rooms within the city of St. Charles, the villages of Elburn and Campton Hills and Campton and St. Charles Townships.
- Booked 2,337 rooms of new business for 9,002 people with a potential spending amount of $1,130,437 in fiscal year 2010.
- Generated about $5 million in potential spending from last year’s record attendance numbers at the Scarecrow Festival
- Touched 242,000 potential visitors through leisure marketing initiatives.