Hoteliers in Cleveland, Ohio, expect the 2016 Republican National Convention will serve as a spotlight to bring in more business to the city after the event.
CLEVELAND, Ohio—The Republican National Convention is drawing national attention to the city of Cleveland, Ohio, and local hoteliers said they expect the city’s wide array of attractions and continued improvements will keep hotel performance up well after the convention.
“There’s good business demand for our hotels; there’s good leisure demand for our hotels, and you’re seeing a lot of exciting things happening in Cleveland with the new development, with the excitement behind the success of the pro sports teams, that demand is going to continue to grow,” said Joe Savarise, executive director of the Ohio Hotel & Lodging Association. “(The RNC) puts a positive spotlight on the market to show what a cool destination it actually is.”
Savarise said Cleveland brings in both business and leisure travel, and that some of its biggest demand drivers are Cedar Point—an amusement park in nearby Sandusky, Ohio—the Rock and Roll Hall of Fame and the city’s proximity to Lake Erie.
“The physical improvements, the infrastructure improvements, the addition of world-class hotel space … what the RNC is doing is helping build up that market, and those improvements stay after the RNC is gone,” he said.
The 2016 Republican National Convention will be held from 18-21 July at Quicken Loans Arena in downtown Cleveland. The city last hosted the convention in 1936.
Cleveland was announced as the host city for the RNC in 2014. In July 2014, there were 21,526 hotel rooms in Cleveland, according to data from STR, Hotel News Now’s parent company. Since August 2015, 18 properties and 2,826 rooms have opened in the market. Currently, Cleveland’s hotel market comprises 23,632 rooms, a 9.8% increase in supply since the city was named as the host of the convention two years ago.
Savarise said the market is still strong despite new supply coming in because of an increase in demand.
“Yes, there’s been more capacity, but the fundamentals of the market are very strong,” he said. “We’re going to continue to see good numbers there.”
Cleveland’s year-to-date occupancy as of May 2016 was down 0.6% to 58.7%, according to data from STR. Average daily rate is down 0.3% at $99.59 and revenue per available room has fallen 0.9% at $58.48 in year-to-date figures.
Performance expectations around conventions
Cleveland hotels should observe good performance metrics around the days of the convention, sources said.
“Performance, business-wise, the convention is going to be, for any hotel in Cleveland, their absolute highest revenue-producing (event) of the year, and in a lot of cases, our histories, as we move forward,” Adam Gurgiolo, GM of the Kimpton Schofield Hotel in downtown Cleveland, told HNN at the property’s 28 April opening event. “With that being said, our excitement about the RNC is what everybody’s excitement is: that it’s a national advertisement. It’s a national spotlight.”
STR tracked metrics from the 2012 Democratic and Republican conventions, held in Charlotte, North Carolina, and Tampa, Florida, respectively, and found that hotel performance was higher for those markets during the span of the events.
“During the peak days, you can see occupancy one-and-a-half to two times its normal amount for both conventions,” said Carter Wilson, VP of consulting and analytics at STR. “In some of the peak nights, we had RevPAR upwards of five times or even higher on certain days what we would normally expect to see from that city.”
Since Cleveland isn’t a top 25 Market, Wilson said the RNC will have a significant impact on performance.
“Particularly in cities that aren’t necessarily performing at sold-out levels already, you see a huge impact,” he said.
Savarise said many hotels in the city have negotiated room blocks with the RNC, meaning hotels cannot charge whatever they want for those rooms. Despite this, Savarise predicted Cleveland’s ADR will increase during the convention.
“What’s going to happen is you’re going to see ADR spike during that time because obviously there is going to be an increase in rates in a good segment of the hotel market,” he said. “We believe the percentage that you’re going to see of (per diem rates) is going to be very small because of the nature of the event.”
Per diem rates are given to government workers, and since the RNC is a political activity, not many government agencies will be able to use these rates, according to Savarise.
“The people who are going to be on the job so to speak from governments are going to be security personnel, and a lot of those stays are actually not happening at hotels,” he said. “The security forces are staying at dormitories at colleges and universities, and at other alternative types of arrangements.”
Security staffing, preparation and training for the RNC is a collaborative effort between federal, state and local security agencies, Savarise said. He said agencies started working with hotels and other businesses early on to provide necessary training such as active shooter situations and how to counter human trafficking.
Larry Trabulsi, SVP at CHMWarnick, which asset-manages the recently opened Hilton Cleveland Downtown, said the Cleveland Cavaliers’ NBA championship and the peacefulness of the victory parade in Cleveland days later showed that security agencies and police are prepared for the RNC.
“(Hilton Cleveland Downtown) was blessed with not only an NBA championship, but also with the parade that was held here a couple of weeks ago kind of gave people a little bit of a dry run of what we might be expecting downtown (for the RNC),” Trabulsi said. “Obviously, 1.3 million peaceful people could be different than what we realize (this) week.”
He said management with the hotel, which opened in June, is coordinating with both Hilton and local officials to make sure they are prepared for the event.
“We’ve spent a fair amount of time with Hilton, and the county has as well, to figure out the operating model-getting the hotel open, getting all the kinks worked out, figuring out the right staffing levels, so that you can meet this level of demand,” Trabulsi said. “Depending on the seasonality, you have to make sure you’re flexing up and flexing down…just the nature of the hotel, and Hilton is really good at doing that.”
The American Hotel & Lodging Association is playing a role in both the RNC and DNC by serving as the official keycard sponsor of both conventions, which was announced in a news release last week.