Oregon Business – Portland’s hotel boom pays citywide dividends

In 2017, the Portland area welcomed 8.4 million overnight visitors. However, between 2009 and 2016, no new hotel was built in the city.

During the same period, hotel occupancy rates fell from 71% to 81.5% (compared to a national average of 65% in 2017). The average daily rate has increased from $ 120 to $ 184.

It was quickly clear: the demand from visitors had exceeded the supply from hotels.

The developers have answered the call. “In 2015, we had about 7,000 rooms in Portland. This minute we’re at 8,660, ”said Steve Faulstick, sales manager at Travel Portland. “Over the next three weeks, we will have 500 rooms open, with 600 more in 2019, then 600-800 more in 2020. This is both a catching-up from a period of stagnation in development, as well as a reflection of the very strong attraction for travelers.

In 2017, visitors to the Portland area generated $ 256 million in tax revenue, with over $ 5.1 billion in direct spending. The tourism industry directly supports 35,300 jobs and generates approximately $ 1.3 billion in employment income.

“When people visit Portland, we see all the benefits,” Faulstick said. “And now we have the infrastructure to make it more accessible.”

Six hundred of those rooms will come from the Hyatt Regency Portland at the Oregon Convention Center, which is slated for completion in fall 2019. The LEED certified hotel is being developed in partnership between Metro, Hyatt Hotels and Mortenson Construction in the hopes of attract and host larger events for the Oregon Convention Center.

“We were missing five to ten large-scale conventions a year,” said Heather Back, communications manager at Metro. A 2012 study estimated that 847,000 rooms were lost regionally due to a competitive citywide hotel package. “The business case was clear: we need this hotel.

The vision for the Hyatt Regency has been around for over 30 years. A bond measure was authorized in 2014 to support the construction of the hotel, and would be reimbursed from the income of its customers.

Once the reservation window opened, 25 future convention groups were confirmed, representing 129,863 rooms in the Portland market. Back added, “All 25 of these groups wouldn’t have booked in Portland without the new Hyatt Regency hotel.”

Metro estimates that the agreements bring in 650 million dollars per year (developed in a study by the Strategic Advisory Group). The completed hotel is expected to generate $ 5.6 million in new state tax revenue and $ 4.7 million in new local tax revenue.

“Portland’s tourism achievements are a direct result of strategic investments made in tourism initiatives with lodging tax revenues,” said Jason Brandt, President and CEO of the Oregon Restaurant & Lodging Association. “If we keep an eye on the price, Oregon’s tourism potential will continue to grow and strengthen our statewide economy. “

Heather Back – Communications Manager at Metro

The secondary impacts of the construction of the hotel are significant: between 2017 and 2020, 2,000 construction jobs will be created, as well as 950 permanent reception positions. Metro, Hyatt and Mortenson also developed diversity initiatives for the project, working with minority and female entrepreneurs and employing economically disadvantaged populations.

Job creation isn’t just for the new Hyatt Regency hotel. “Typically, one full-time employee is created for two new hotel rooms,” Faulstick said. “The city expects 4,000 to 5,000 new rooms by 2020, which will potentially result in 2,000 to 2,500 full-time family jobs.”

Many hotels have partnered with Portland-based architectural firms, interior design studios, and outsourcing companies on new projects.

Further still, with clients looking for “experiential stays,” partnerships with Portland brands have almost become a requirement for hoteliers. Marriott’s Hi-Lo hotel offers Pendleton wool, Nossa Familia coffee, Maak Lab soaps and fragrances (among other partnerships); The Dossier Hotel de Provenance fills its rooms with prints, paintings and illustrations by Portland artists and also delivers pints of salt and straw to the rooms; The Hilton’s Canopy hotel bar serves Willamette Valley wines and Portland spirits. In addition, hotel lobbies often host local music and art performances.

Room4Local products are featured in Hi-Lo hotel rooms, including pillows from Pendleton, reclaimed woodwork from Pioneer Millworks, and bath products from Maak Lab.

Travel Portland connects suppliers of My People’s Market, a marketplace that features more than 80 minority-owned businesses, with hotel operators to help place and sell their products in hotels.

According to Faulstick, this is a “win-win” situation for vendors, customers and hoteliers. “People don’t want to come here and stay in a branded hotel box that looks like anywhere in the United States,” Faulstick said. “They want the Portland touch. This is the rule, not the exception. And hotels understand this perfectly.

The big question arises: with the rise of new developments, can hoteliers maintain their occupancy rate?

“With leading promotional partners like Travel Portland and Travel Oregon, I think the Portland metro market is well positioned to meet the challenge of matching new supply with increased demand,” Brandt said. “Both organizations continue to receive national attention for their innovative approaches to promoting tourism and the economic benefits of Oregon as a result.”

Hotel development has an aggravating effect. Once a city increases its capacity to host events, it is able to attract greater opportunities. Major events not only generate hundreds of millions of dollars in tourism spending and accommodation taxes, but they also provide national and international visibility through media coverage, which encourages the pursuit of tourism.

photo1Staff at Mortenson, Metro and Oregon Convention Center commemorate the hotel with 28 trades. – photo by Grady Wheeler

In 2016, Portland was able to host the IAAF World Indoor Championships, the first American host since 1987. It is now possible to host an NBA All-Star game (previous offers were rejected as the Commissioner of the NBA, Adam Silver, cited “a shortage of hotel rooms”).

IndyCar GrandPrix races returned in 2018 after a 10-year hiatus, which brought greater national visibility.

“We already have the magic wand, being our people and our experience,” Faulstick said. “But we needed better awareness and better distribution. Now that we have that infrastructure, we’re in a whole different arena for major opportunities. He added: “We are on the cusp of a spectacular future. I think about what Portland will be like in a few years and I couldn’t be more excited.

Brand Stories are paid content articles that allow Oregon Business advertisers to share information about their organizations and interact with readers on business and public policy issues. The stories are produced in-house by the Oregon Business marketing department. For more information, contact associate editor Courtney Kutzman.

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Sandy A. Greer

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