In our retail market analysis work, we always consider three main drivers of demand for downtowns and commercial districts: Residents, Employees/ Workers and Visitors. In our latest work with Stantec in Morganton, NC we were faced with a challenge of a vibrant downtown with no in-town lodging or accommodation options. LOA and the team at Stantec stayed overnight in Morganton for three days of focus group discussions in the closest possible lodging we could find about 2.5 miles outside of downtown Morganton – a 6 minute drive away or a 51 minute walk!
Morganton, like many other downtowns in semi rural locations, is situated close to a network of state parks, natural trails, outdoor recreation facilities, wineries and heritage sites that attract hoards of seasonal visitors. These attractions located within downtown or close to downtown are bringing in visitor demand in the form of families, young Millennials and professionals, and even empty nesters. Without a downtown lodging option, many of these visitors, like our team, would have to make reservations outside of town. Furthermore, right around the corner from available lodging options, there are often banks, restaurants and drive-thru fast food in typical strip mall formats that might pull spending away from downtown.
Having hotels downtown is critical in driving visitor demand. They extend the stays of not only leisure visitors but also business representatives who are in town for conferences or meetings, and therefore increase the chance of generating sales for local businesses. In Center City, Philadelphia, for example, the presence of over 43 hotels enabled a record 3.11 million occupied hotel room nights in 2015, augmenting retail spending in the downtown by an estimated $411,790,849.
In downtowns with large institutions such as hospitals and colleges, business travelers and group travelers are already common visitors for conferences and work exchange programs. In fact, in Morganton NC, institutions such as the NC School for the Deaf and the Carolinas Blue Ridge Healthcare Center already bring in a number of patients and professional visitors throughout the year. These groups come through downtown normally between Monday and Thursday and shop or look for things to do at later hours of the day, after whatever consultations, conference or sessions they’ve been attending. Hotels, with their myriad of leasable venues, can also facilitate year-round conventions and trade shows that are often attended by out-of-towners.
In order to effectively maximize the potential visitor demand, downtowns not only need to offer lodging and accommodation options for overnight stays but stores also need to stay open later, or past 6pm. After all, 70% of all consumer spending (both locals and visitors) takes place after 6:00 pm, according to Roger Brooks International. In order for later opening hours to really work, a critical mass of businesses must be open after 6:00, not just a few.
On the other hand, leisure tourists often visit and occupy hotels on weekends thru Monday. In Center City, the 88.7% Saturday hotel occupancy rate is indicative of the strength of leisure tourism there and is only second to New York City (89.6%) among major northeast cities. According to Center City District, overnight leisure tourists are likely to spend more at restaurants and retailers and help account for the strong retail demand created by tourists in Center City.
If you’ve already bought into all of these benefits of downtown lodging, the first step you should be taking is to conduct a feasibility study.Using projections of occupancy and average room rate, a downtown can estimate whether a new lodging facility would make financial sense. After all, downtown hotels should be assets that attract ‘new’ customer to businesses nearly every day and in addition should generate significant tax revenues and create jobs for local residents.