Business

With so many new hotels, Whatcom looks for ways to grow demand

Rigoberto Flores spreads drywall mud on the wall of a room at the Holiday Inn Hotel and Suites near the Bellingham airport on Friday, Aug. 26.
Rigoberto Flores spreads drywall mud on the wall of a room at the Holiday Inn Hotel and Suites near the Bellingham airport on Friday, Aug. 26. eabell@bhamherald.com

After a flurry of hotel construction projects in recent years, Whatcom County had plenty of extra rooms this summer, but there are signs the area is finding ways to fill the extra supply.

General managers at a few of the newer Bellingham hotels are reporting flat occupancy numbers this summer compared with the year before, which could be considered not surprising given what’s happened in the past year.

Since last summer more than 285 rooms have been added to the area’s inventory through either the expansion of existing hotels or new ones entering the market.

That’s in addition to the more than 500 rooms that became available between 2013 and spring 2015.

Compounding the jump in new hotel rooms this summer was the weak Canadian dollar, leading to a big drop in traffic into Whatcom County from the north.

From May through July, fewer than 3.6 million people crossed the five borders into Whatcom County, according to data collected by the Border Policy Research Institute at Western Washington University. That’s about 340,000 fewer people than the same period in 2015.

“Summer worried us a little bit,” said Sara Holliday, general manager of the Home2 Suites by Hilton in Bellingham, situated on the north end of town on Northwest Avenue. The Canadian dollar had an impact not only on the hotel but the nearby Bellingham International Airport, where passenger traffic continues to decline year-over-year.

“It is such a unique market (with the Canadian dollar influence), but demand needs to grow into this supply,” Holliday said.

$70.8 million Amount spent by visitors for accommodations in Whatcom County in 2015, according to a Dean Runyan Associates report. That’s up from $52.2 million in 2010.

The local hotel market is about to get even more competitive with the completion of the Holiday Inn Hotel & Suites near the airport. The 153-room hotel is expected to be completed before the end of the year. The hotel will have 9,000 square feet of meeting space, a full-service restaurant and bar called Northwater, an indoor saline pool, hot tub, sauna and fitness center, said Randi Axelsson, director of sales and marketing for the hotel.

While the industry is much more competitive locally than a few years ago, it appears the revenue pie is growing.

In 2015 an estimated $70.8 million was spent by visitors for accommodations, an 8.2 percent increase compared with 2014, according to a study done by Dean Runyan Associates. In 2010 the amount spent by visitors for accommodations was $52.2 million, according to the report.

When it comes to the local hotel vacancy rate, the big year-over-year difference appeared to narrow by late spring and early summer.

In April, 62.8 percent of the region’s hotels rooms were filled, well behind the April 2015 occupancy rate of 75.5 percent, according to data from Bellingham Whatcom County Tourism, which looked at about half of Whatcom County’s hotels.

By May, the occupancy rate jumped to 71.8 percent, closer to the previous year’s rate of 75.4 percent. In June, the rate dipped to 67.7 percent, while the 2015 June rate was 74.3 percent.

In April, May and June, the average daily cost for those hotel rooms remained very similar to the previous year. In June, for example, the average daily rate was $125.57; in June 2015 the rate was $125.86.

WHERE THE BOOKINGS CAME FROM

Weddings and multiday events such as soccer tournaments and horse events were good for the hotel business in Whatcom County this year, said Keith Coleman, general manager for the SpringHill Suites by Marriott on Northwest Avenue. That, along with vacation travelers, made bookings at the SpringHill and TownPlace suites about equal to last summer’s, despite the increase in extra rooms in the area.

“Bellingham is a huge attraction between spring break through Labor Day,” Coleman said.

Whatcom County had quite a few extra events this summer that helped tourism in general, such as the Subaru world record attempt in Birch Bay and the longest strawberry shortcake world record attempt in Lynden, said Loni Rahm, president of Bellingham Whatcom County Tourism. That type of one-day event may not mean hotel bookings, but could lead to more extended visits later.

“Much of tourism involves lots of smaller events,” Rahm said.

For extended-stay hotels, a tight real estate market is leading to some extra bookings. People who are moving to Whatcom County for new jobs quickly discover that buying or renting a house can take some time, so an extended-stay hotel becomes an option.

“There are a lot of people that are looking for housing right now,” Coleman said, adding that he’s had several guests who thought they were close to buying, but the deals didn’t work out because of other competitive offers.

The tight real estate market has also made it challenging for local residents to find bigger houses, so many are choosing to remodel or expand.

Through July, Bellingham has issued residential remodeling permits for projects valued at $15 million in 2016, up from $6.6 million for the same period in 2015. For homeowners who don’t want to live in a construction zone, many are opting to check into an extended-stay hotel, which tend to have larger suites and kitchens, Holliday said.

WHAT TO DO ABOUT WINTER MONTHS

The most challenging time for the Whatcom County hotel industry is when the weather turns and brings in winter.

Last January the local hotel occupancy rate dipped to 45.7 percent, well below what most hotels need to break even. Figuring out how to attract tourists to the area in the winter and early spring is an ongoing issue. Coleman believes one solution is a conference center, which would give the hotels a chance to attract more business group meetings to the area.

“We keep building hotels but we haven’t been keeping up with conference space,” he said.

Dave Gallagher: 360-715-2269, @BhamHeraldBiz

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