Recession squeezes state travel industry

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Journal Sentinel, Milwaukee, WI

By Tom Daykin

With the recession persisting and job losses mounting, it's no surprise that Wisconsin's $13 billion travel industry is taking a hit this summer.

Fewer people are traveling during this peak season, hotel operators are reporting. But the season hasn't been as bad as many had expected. And the trendy term "staycation" hasn't replaced the word "vacation" in most people's vocabularies, said state Tourism Secretary Kelli Trumble.

"The American vacation is not something people are willing to cut completely," Trumble said last week after a tour of North Woods tourism spots. "I think that the tourism industry did not know what to expect going into this summer season. Overall, they're pleased because people have not stopped traveling."

Wisconsin's tourism-based businesses are fortunate that things aren't worse, given the rising unemployment rate, said Tom Diehl, chief executive officer at Tommy Bartlett Inc., which operates the Tommy Bartlett show on Lake Delton.

But travelers are cutting back on spending, said Trumble, Diehl and others. At Baker's Sunset Bay Resort on Lake Delton in the Wisconsin Dells area, guests are spending more time at the 74-room hotel's beach, said owner Dawn Baker.

"We have noticed that the property is a little bit busier because they're not going out and spending money on the attractions as much," she said.

At the 21-room Bayfield Inn in the Lake Superior community of Bayfield, General Manager Ron Madich sees guests turning more to supermarkets than to restaurants for their meals.

"I've never seen so many coolers full of wine, beer and food," Madich said.

And at downtown Milwaukee's 243-room Doubletree Milwaukee City Center, this summer's guests have booked shorter stays.

"They're getting away," said Jeff Welk, general manager. "But they come in for the night, rather than the weekend."

Such is the summer of 2009: travel, done on the cheap. That includes delays on booking hotel rooms in hopes of getting lower rates, Trumble and Welk said. That tactic often works, Welk added.

Tax collections fall

Statistics from hotel occupancy reports and room tax collections show the extent of the decline.

In Milwaukee, tax revenue collected by the Wisconsin Center District, the agency that operates the Midwest Airlines Center and other downtown convention facilities, was down 28% in June compared with June 2008, with a 15% decline in July, said Jeff Sinkovec, the district's director of finance and accounting. Those collections are for local taxes on hotel rooms, restaurants and rental cars.

Hotels in Milwaukee County reported an overall occupancy rate of 65.4% in June, compared with 75.9% in June 2008, according to Smith Travel Research. In July, the occupancy rate was 68.1%, down from 76.6%.

Much of the decline is tied to drops in business travel and conventions, said David Fantle, vice president of public relations at Visit Milwaukee. Together, those segments make up 70% of travel spending in the Milwaukee area, according to Davidson-Peterson Associates.

"For the most part, the leisure portion of the travel business seems to be holding pretty well," Fantle said.

But there have been drops in vacation travel to Milwaukee, Welk said. He said the Doubletree this summer saw less business during Summerfest.

"Nobody's really got the spare cash," he said.

Marcus Hotels and Resorts, which owns the Hilton Milwaukee City Center, the Pfister Hotel and the Intercontinental Milwaukee Hotel, saw a drop in both business and leisure travel during the six-month period that ended May 28, said Chris Anderson, vice president of sales.

More recently, the company has seen an improvement in leisure travel, but at lower room rates. Marcus Hotels owns eight hotels, including 240-room Hilton Madison at Monona Terrace and the 355-room Grand Geneva Resort and Spa in Lake Geneva, and manages several other hotels owned by others. Marcus doesn't break out results for its individual hotels. Its three Milwaukee hotels total over 1,200 rooms.

The increase in unemployment probably has people watching their spending more carefully, including cutting back on vacations, Anderson said.

Cool weather a factor

In Door County, among Wisconsin's most popular tourism destinations, room tax collections through June were down about 5% compared with the first six months of 2008, said Dave Holtz, general manager of the 67-room Bridgeport Resort in Sturgeon Bay.

In the Dells area, business for hotels on Lake Delton has rebounded from last year's lousy summer, when the lake drained in June. The lake's restoration has helped bring Sunset Bay Resort's business back to its 2007 level, Baker said.

But throughout the Dells area, revenue for tourism-based businesses is probably down about 5% from 2007, Diehl said. He said the cooler than normal summer has hurt outdoor businesses such as the Tommy Bartlett show. Baker also cited the weather as a factor in dampening the demand for rooms at her resort.

Sunset Bay has attracted guests in part by offering a lot of package deals, with vacationers booking a room and getting discounted tickets to Dells attractions. In past years, such package deals accounted for less than 1% of the resort's business, Baker said. This summer, they made up 10% of Sunset Bay's business.

"With the economy theway it is, people like to see exactly how much their vacation cost," Baker said.

Other hotel operators are making deals.

At Bridgeport Resort, room rates are lower, but the property's room revenue is running about 5% higher than last summer, Holtz said.

"Many phone calls today are people asking what specials you have," he said. "Obviously, the consumer was shopping, and they were negotiating and bargaining. If we had to provide an upgrade, or give a little on the rate, we did that."

Bayfield Inn and other properties managed by that hotel have seen a 5% increase in revenue this summer, Madich said. Bayfield is seeing increased business from people coming from relatively close cities, including the Duluth, Minn., area. To help attract guests, the hotel added home-baked organic breads and other items to its complimentary breakfast.

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