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Hotel market continues to grow but may soon slow

 

Three of the four hotels built and opened in Columbus in the past 10 years stand in the foreground. Local hotel developers say with two additional hotels planned for Columbus, the hotel market is maturing and that more demand may be needed before additional hotels open.

Three of the four hotels built and opened in Columbus in the past 10 years stand in the foreground. Local hotel developers say with two additional hotels planned for Columbus, the hotel market is maturing and that more demand may be needed before additional hotels open. Photo by: Courtesy photo

 

 

 

Alex Holloway

 

 

With five new hotels in two cities and two more expected to come to Columbus, the past decade has been one of growth for the hospitality industry in the Golden Triangle. 

 

Columbus gained three hotels from 2007 to 2016 according to STR, a company that tracks hotel performance across the United States and internationally. That growth led to an increase in rooms from 849 in 2007 to 1,156 last year.  

 

The close of Columbus' Ramada in December caused those numbers to drop to 1,041 rooms, but that building is currently being renovated for a La Quinta. Most of those lost rooms should be recaptured once that location reopens.  

 

With La Quinta coming and a Holiday Inn Express on Sixth Street North expected to open in June, Carpenter - who's been with the CVB since 2008 - said she's optimistic about hotels' strength in the area. The Holiday Inn is expected to add about 80 rooms in Columbus. 

 

"They base it on supply and demand," she said of hotel developers. "They base their coming here on a need and the activities that we have created." 

 

 

 

A maturing market 

 

Growth hasn't been limited to Columbus. Starkville has grown from 10 hotels a decade ago to 12 according to STR, with an accompanying jump from 701 rooms to 873. 

 

Heath Barret, interim CEO of the Greater Starkville Development Partnership, attributes the growth in hotel rooms to the city's population increase, to events and to Mississippi State athletics.  

 

"With the industrial growth in the Golden Triangle, hotel rooms are filling up," Barret added.  

 

Sunny Sethi, owner of the Hilton Garden Inn in Starkville, as well as the Hyatt Place and River Chase Inn in Columbus said the Golden Triangle is a good market for hotels, though he cautions that supply may soon out pace demand. 

 

"It's a healthy market that's been good for growth," Sethi said. "It's leveling off a bit because there is a supply now. It's maturing, but it's a good market, and we've done well in both communities. 

 

"With the other hotel (Holiday Inn Express) that's opening this year, we will tip the scales so that demand needs to catch up to supply," he added. 

 

Statistics suggest Sethi is correct.  

 

While demand has increased over the past decade, occupancy rates have been declining. Last year there was a raw demand for 647 rooms in Columbus versus 557 in 2007, according to STR. During the same time period, average occupancy has dropped from 64.7 percent to 55 percent.  

 

Starkville's demand may not be softening as quickly as Columbus'. Starkville's average occupancy has remained unchanged since 2007 at 60.4 percent. Hotels saw higher raw demand of roughly 527 rooms per day last year, compared to 423 in 2007. 

 

Mark Castleberry, a developer with multiple hotels in Columbus and Starkville, agrees the market is maturing. 

 

"When we built the Fairfield Inn (in Columbus) in 2011, there had not been a new hotel built in 13 years," Castleberry said. "There definitely had been some built-up demand. We don't see that type of need for additional hotels in the market now." 

 

Castleberry added hotel room supply needs to continue to be monitored as the Golden Triangle grows.  

 

 

 

Reasons for growth 

 

Castleberry said the Golden Triangle's industrial growth has been a key factor in the expansion of hotels in the market. Benefits spread to both cities, he said, but Columbus tends to draw more of a business crowd, and Mississippi State University has a greater impact in Starkville. 

 

"There's a direct relationship with (hotel room growth) to SDI, PACCAR, Airbus, Baldor, and all of those companies," Castleberry said. "They are absolutely impactful to the need of hotel rooms in the market." 

 

Sethi added Columbus hotels benefit tremendously from both local events and the Baptist Memorial Hospital-Golden Triangle.  

 

Carpenter pointed out the Golden Triangle's communities work together when big events come, so the benefits are spread out. 

 

"We've created, all of us working together, a lot of synergy. You've got business travelers during the week... Mississippi State has been huge for us. We're advertising there and letting people know we offer competitive rates and wonderful restaurant options here in Columbus. 

 

"When we've brought in fishing and soccer tournaments, we work with the surrounding towns to bring visitors to all the communities," she added. "It carries over into Starkville and Oktibbeha and Clay County and West Point."

 

 

 

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