Supply’s Tight, Demand’s High, Room Rates Rise

By Marion Davis, Staff Writer

R.I. hotels enjoy a hot market; some price parity does exist

In mid-winter, you can get a room at the Hotel Viking in Newport for as little as $99. But the bargains don’t last long: By April, a Saturday night in a standard room will cost you $179, and if you can get a room in July, it’ll cost you $329.

At the Providence Biltmore Hotel, by contrast, the rates hold fairly steady most of the year, at $159 to $219 this month, depending on the room type. The Courtyard by Marriott starts at $139, according to Expedia, while the Holiday Inn Providence Downtown is at $149.

Going to the Radisson Hotel Providence Harbor, in Fox Point, won’t save you money; it’s $139.

But you can trade up to the new boutique Hotel Providence for $189. Only The Westin Providence is significantly pricier, at $259 to $444, depending on the room style.

Experts say hotels will charge what the market can bear, and in Providence, with a tight room supply but also close competition for guests, the market has produced fairly homogeneous pricing, and rates comparable to those charged in Boston’s tony Back Bay.

Yes, for only $20 more than what the Biltmore will charge you – and $10 less than the Hotel Providence – you can stay at the Boston Park Plaza, The Lenox Hotel Boston, The Fairmont Copley Plaza, or the Marriott Boston. The Westin Copley Place’s rates start at $199.

And it’s not just Providence: A new AAA survey shows Rhode Island is one of the most expensive states to vacation, costing a family of two adults and two children an average of $307 per day, including $181 for lodgings and $126 for meals. 

Only Hawaii and the District of Columbia cost more, the AAA survey found. A vacation in New York state averages $307, and one in Massachusetts, $304. The national average, AAA reported, is $247 per day, including $129 for lodgings.

For perspective, insiders say, you do need to remember top destinations such as New York City were badly hit by the Sept. 11 attacks and the recession, and their prices haven’t fully bounced back. Meanwhile, Rhode Island’s hotels, especially those in Providence, held steady.

Figures from the Providence-Warwick Convention and Visitors Bureau show Providence rates rose from an average of $136 in 2002 to $140 in 2004. In Warwick, where five new hotels have opened in four years, rates declined slightly, from an average of $103 in 2002, to $95 in 2004. A December report by PKF Hospitality Research, meanwhile, shows average room rates in the top 50 U.S. markets will top $100 this year, for the first time since 2000. The same report pegged Boston’s average daily rate at $133, and San Francisco’s at $132.

What’s made this market stronger, said Dale J. Venturini, president and CEO of the Rhode Island Hospitality and Tourism Association, is the huge buzz about Providence and the state as a whole.

“We are a hot destination,” she said. “We’ve also started to brag about the product we have: A lot of people love exclusive stuff and new stuff, and we have a lot of that. Our eco-tourism is phenomenal. And look at our beaches – you don’t see beaches like ours.”

Providence alone is a great sell, said Kristen Adamo, of the convention and visitors bureau, with “one of the best culinary scenes in the country” and “an arts and culture scene that’s amazing for a city this size.”

Even parts of Rhode Island that the locals have long taken for granted, like the Blackstone Valley, now have tourist appeal, Venturini noted: You can take an “eco-trip” up the Blackstone River and see both beautiful nature and historic sites.

“What we’ve done is taken our natural resources and packaged them to sell them,” Venturini said. Rhode Island’s attractions are also good for families, she noted, and with a little research, you can find a hotel for almost any budget. (Indeed, you can stay at the Econo Lodge Middletown this month for as little as $45, and even on Memorial Day weekend, the Best Western Atlantic Beach had rooms, as of last week, for as little as $71.)

Rudi Heater, director of hotel operations for Carpionato Properties, which owns both the three-star Crowne Plaza and the two-star Holiday Inn Express in Warwick, said the “continuing strong demand” for rooms has enabled the hotels in that area to raise their rates to keep up with “extraordinary” cost hikes, such as a 26-percent jump in utility costs.

But the business travelers who are the “backbone” of their clientele are also price-sensitive, Heater said – often enough to forgo the extra amenities of the Crowne Plaza (which ranges from $119 to $149) to save $20 or $30 at the Holiday Inn Express.

And as in Providence, Heater said, there’s substantial parity among the hotels, both in amenities and in rates. Forget truly cheap options here, however: developers don’t see them as worth the investment, Heater noted, when they can hit a more upscale market instead.

Across the state, that’s where the growth is. The Regency in Fox Point is a step up from the old Days Inn it replaced. The Holiday Inn downtown is about to be revamped to become a more upscale Hilton. The new Hotel Providence caters to the upscale boutique clientele.

And the 270-room Marriott Renaissance Hotel being carved out of the Masonic Temple is expected to set its rates somewhere between the Biltmore and the Westin, Heater said – again, not quite luxury-level, but definitely geared to upscale travelers.

Existing hotels have also been adding more upscale amenities, such as the Biltmore’s and Viking’s new spas.

“It’s an incredible amenity for any hotel to offer,” said Gregg Fracassa, general manager at the Viking, which opened a spa last year with not only the standard offerings, but also Indonesian and Thai healing rituals, couples’ massage rooms, and other specialty services.

“A lot of the market research shows spas have just continued to grow and grow,” Fracassa said. Demand for the Viking’s spa is so high, he added, that “on some weekends, if you don’t make an appointment before you (arrive), you won’t even get into the spa.”

The new attraction, combined with travelers’ growing interest in hotels with a distinctive character, has boosted occupancy rates, Fracassa said. That, in turn, has boosted profits even while the Viking, following other Newport hotels’ lead, held rates more or less steady.

Having a strong upper-end hotel market is good for everyone, Adamo and Venturini said, because the same guests who pay $160 or $200 for a room will dine at Providence’s top restaurants, shop at the Providence Place mall, and be drawn to other upscale attractions.

But asked how much more upper-end growth Rhode Island’s hotel market can bear, insiders acknowledge there is a limit. Heater said he believes Providence could handle one more top-level hotel – at the Westin’s price point – beyond what’s already under construction.

And Adamo and Venturini said as an expected 600 new hotel rooms come on line in the next few years, easing the room shortage, the market will change. “I think you’re going to see, as the number of rooms increases, the prices will level off a bit,” Adamo said.

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