The impact of the coronavirus pandemic still plagued downtown Milwaukee hotels throughout the month of June, though key measures such as occupancy and daily room rates continued the slow climb seen in May, according to industry data.
The data on Milwaukee central business district hotels was provided by Hendersonville, Tennessee-based STR Inc. It showed hotel occupancy for the week of May 31-June 6 was 18.8%. This was a 78.2% decline from what was seen the same period a year ago.
Occupancy rates climbed each week leading up to the last full week of the month, June 21-27, which saw occupancy of 25.9%. This was down 72.2% compared to 2019.
Even with the effects of the pandemic in mind, "I'm surprised it (occupancy) is that low," said Greg Hanis, president of New Berlin-based Hospitality Marketers International Inc.
Hanis said occupancy rates for the month of June were consistently below national averages of hotel occupancy. He said the 25.9% occupancy for the week of June 21 is nearly 44% lower than nationally, which was 46.2%.
But the gap between downtown Milwaukee and national occupancy rates closed over the month. And by other key measures, including average daily room rates and revenue per available room, Milwaukee was slightly above national averages, Hanis said.
The month started with downtown Milwaukee hotel occupancy down 52.2% compared to the U.S. average of 39.3%.
Average daily room rate for Milwaukee started the month at $83.54, down 45.6% versus the previous year. Rates steadily rose each week to end the month at $96.23 for the week of June 21, though that measure was down 48.2% versus 2019. But the rate was slightly higher than the U.S. average of $95.37 for the same week.
Revenue per available room for Milwaukee hotels stood at $15.68 at the beginning of June, an 88.2% decline over last year. In the final full week of the month, that number rose to $24.94, down 85.6% from 2019.
What's discouraging is that June is supposed to be the start to the busiest, and most profitable, time of year for the Milwaukee hotel market, said Hanis.
"It’s definitely well below what it should be for the season," he said. "And that is, June and July are the highest demand months in Milwaukee. For it to be under-performing … and well below the U.S. average (in occupancy), is indicating the downtown hotels definitely are suffering."
Doug Nysse, principal of Menomonee Falls-based Arrival Partners LLC, said Milwaukee benefits from a number of major events and gatherings during the summer months.
"Upper Midwest travel is strongest in summer due to the weather and school vacation," he said. "And then Milwaukee in particular is driven by the festivals and Northwestern Mutual ('s annual meeting) and other summer events. This year all those events have been canceled."
Meanwhile, business travel is down across the U.S. because of COVID-19 and related economic impacts. Nysse pointed out that states make it difficult for business travel because they require visitors from certain areas to quarantine for some time before entering. Such states include New York. And overall business confidence has slashed travel budgets, he said.
But there remains confidence among some hotel developers, said Nysse. Those looking to better times ahead are primarily those in control of sites in "city center locations" in the U.S. and have control of a strong hotel brand. Those developers figure that by the time they get through entitlements, design and construction, which could be up to three years, the market will be recovered.
"So, there's confidence among those folks," he said.