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Tough Market Drives Down Occupancy Rate, Prices At B-N Hotels

Carleigh Gray
The Hyatt Place hotel in Uptown Normal opened in August 2015

Changes at State Farm are impacting many parts of the local economy—from real estate to jobs to downtown Bloomington’s future.

It’s also one of the biggest pressures on the struggling local hotel industry, according to Ray Ceresa, president of the Bloomington-Normal Hotel and Lodging Association.

As of March 31, this year's average occupancy rate for Bloomington-Normal hotels was a “dismal” 44 percent, Ceresa said. That’s lower than the statewide average (54.2 percent) and other metro areas like Peoria, Rockford, and Champaign-Urbana, according to STR, a data and analytics firm. The occupancy rate for local hotels in 2017 averaged 52.3 percent.

Occupancy rate data from STR:

“State Farm is doing a lot, but they’re doing a lot in Phoenix, Dallas, and Atlanta. A lot of their travel is going that way. We’re not seeing a lot of transient business—the independent business traveler—coming to Bloomington-Normal,” said Ceresa, general manager at the Doubletree by Hilton in Bloomington.

Another factor, he said, is general budget tightness among customers looking to, say, book a conference room for an event.

With occupancy down (and more rooms available), supply and demand has pulled down prices too as hoteliers try to attract budget-conscious guests. The average daily rate in Bloomington-Normal so far in 2018 is $87, down 2.4 percent from a year ago, STR data show. That means “thousands and thousands and thousands” of lost revenue for hotels, Ceresa said. 

“It doesn’t seem that much by (declining) 2 percent. But when you do the math—even at my hotel, if I’m down a couple bucks, we have thousands of rooms per month, it’s thousands of dollars just for my property,” said Ceresa. 

As a result, hotels like the Doubletree are closely watching their staff hours and looking for ways to save money on regular purchases like soap and towels, Ceresa said.

When asked what could help the local hotel industry rebound, Ceresa pointed to economic development. New companies that are moving into McLean County, including Brandt Industries and Rivian, are positive signs, Ceresa said. 

“That’s what we need. More economic development,” Ceresa said.

Home-Sharing Regulations? 

Meanwhile, Ceresa said he’s asked Bloomington and Normal city officials to consider passing new regulations on those who rent their properties on short-term vacation websites like Airbnb, VRBO and HomeAway, as other municipalities have done.

The number of listings on Airbnb, for example, varies by date and what kind of property you’re seeking. If you’re renting an entire Bloomington-Normal property for Wednesday night, there were 67 options available, a quick search showed.

Ceresa said other markets like Champaign-Urbana have even more Airbnb listings, putting added pressure on struggling hotels.

“It’s already out of control in Champaign-Urbana. In Bloomington-Normal, we need to act upon it now before it gets out of control,” he said.

Bloomington and Normal city governments collect a 6 percent hotel/motel tax, a portion of which goes to the Bloomington-Normal Area Convention and Visitors Bureau. Ceresa said he wants to ensure short-term rental property owners pay the tax too. He said many owners are really businesses renting, say, a vacant apartment, not a private homeowner looking to rent out a spare bedroom.

“We just want them to play by the same rules,” Ceresa said.

You can also listen to the full interview:

GLT's full interview with Ceresa.

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Ryan Denham is the digital content director for WGLT.