Added supply cuts demand for area hotels

August 6, 2013 Updated Aug 6, 2013 at 2:28 PM EDT

By James Fink, Buffalo Business First

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Added supply cuts demand for area hotels

August 6, 2013 Updated Aug 6, 2013 at 2:28 PM EDT

New hotel rooms, especially in the suburban markets, led to a slight downturn in occupancy rates for properties in Erie County.

According to statistics compiled by Smith Travel Research of Nashville, area hotel occupancy in June dropped 3.3 percent to 76.4 percent this year from a 79 percent mark one year ago. For the year-to-date, occupancy is off 1.7 percent to 61.5 percent for the same period this year from 62.5 percent in 2012's first six months.

The culprit?

The influx of new suburban properties.

"The supply out-paced the demand," said Michael Even, Visit Buffalo Niagara vice president of convention sales and service. "Right now, we have more available hotel rooms than we'd had in a while."

Even said with new hotels either about to come on line or in local economic development pipelines, Visit Buffalo Niagara needs more marketing dollars to help promote the area to tourists, meeting and convention planners. Erie County takes in more than $10 million in bed tax dollars but approximately 40 percent is allocated to Visit Buffalo Niagara.

Increasing tourism dollars and opportunities is one of the key items in a 12-point economic development recovery plan being championed by Erie County Executive Mark Poloncarz.

"For us to be effective and fill more (hotel) rooms, we need more marketing dollars allocated to us," Even said.

Buffalo and Erie County are not alone in seeing hotel occupancy drop. Hotel occupancy is considered a key economic indicator in the hospitality industry.

Nationally, hotel occupancy was off 0.3 percent in June, falling to 69.9 percent from last year's 70.1 percent mark.

For the first half of the year, the national hotel occupancy rate increased 1.5 percent to 61.8 percent from 60.9 percent.

Even with the drop, for June, Buffalo and Erie County remain above the national hotel occupancy rate.

Niagara Falls saw its hotel occupancy, in June, drop 2.1 percent to 79.8 percent compared to 81.5 percent last year. Niagara Falls, last June, hosted Nik Wallenda's international tightrope walk, a key factor in the tight demand for rooms in the Cataract City.

For the year-to-date, Niagara Falls' saw a 1.2 percent increase in hotel occupancy to 57.1 percent from 56.4 percent in 2012.

Rochester saw its June hotel occupancy rate fall 4.7 percent to 64.5 percent from 67.7 percent.

For the first half of the year, Rochester's hotel occupancy rate fell 1.7 percent to 52.3 percent from 53.2 percent a year ago.

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